scholarly journals Over the Cliff: From the Subprime to the Global Financial Crisis

2011 ◽  
Vol 25 (1) ◽  
pp. 49-70 ◽  
Author(s):  
Frederic S Mishkin
Keyword(s):  
Financial Crisis ◽  
Global Financial Crisis ◽  
Financial System ◽  
The United States ◽  
Investment Bank ◽  
Government Interventions ◽  
Troubled Asset Relief Program ◽  
The Government ◽  
The Global Financial Crisis ◽  
Relief Program

The financial crisis of 2007 to 2009 can be divided into two distinct phases. The first and more limited phase from August 2007 to August 2008 stemmed from losses in one relatively small segment of the U.S. financial system—namely, subprime residential mortgages. Despite this disruption to financial markets, real GDP in the United States continued to rise into the second quarter of 2008, and forecasters were predicting only a mild recession. In mid-September 2008, however, the financial crisis entered a far more virulent phase. In rapid succession, the investment bank Lehman Brothers entered bankruptcy on September 15, 2008; the insurance firm AIG collapsed on September 16, 2008; there was a run on the Reserve Primary Fund money market fund on the same day; and the highly publicized struggle to pass the Troubled Asset Relief Program (TARP) began. How did something that appeared in mid-2008 to be a significant but fairly mild financial disruption transform into a full-fledged global financial crisis? What caused this transformation? Did the government responses to the global financial crisis help avoid a worldwide depression? What challenges do these government interventions raise for the world financial system and the economy going forward?

scholarly journals The politics of bailouts: Estimating the causal effects of political connections on corporate bailouts during the 2008–2009 US financial crisis

Public Choice ◽  
2021 ◽  
Author(s):  
Vuk Vukovic
Keyword(s):  
Financial Crisis ◽  
Financial Services ◽  
The United States ◽  
Political Campaigns ◽  
Political Connections ◽  
Troubled Asset Relief Program ◽  
Top Executives ◽  
The Government ◽  
The Right ◽  
Relief Program

AbstractIn 2008, as the financial crisis unfolded in the United States, the banking industry elevated its lobbying and campaign spending activities. By the end of 2008, and during 2009, the biggest political spenders, on average, received the largest bailout packages. Is that relationship causal? In this paper, I examine the effect of political connections on the allocation of funds from the Troubled Asset Relief Program (TARP) to the US financial services industry during the 2008–2009 financial crisis. I find that TARP recipients that lobbied the government, donated to political campaigns, or whose top executives had direct connections to politics received better bailout deals. I estimate regression discontinuity design and instrumental variable models to uncover how election outcomes for politicians in close races affected the distribution of bailout funds for connected firms. The results do not imply that some banks were deliberately favored over others, just that favored banks benefited because of their proximity to the right people in power. If being politically connected matters in general, in times of crisis it matters even more.

A Decade after Lehman: An Assessment of Key Regulatory Responses to the Global Financial Crisis

2019 ◽  
Vol 16 (4) ◽  
pp. 457-483
Author(s):  
Andreas Kerkemeyer
Keyword(s):  
Financial Crisis ◽  
Global Financial Crisis ◽  
Financial System ◽  
Capital Requirements ◽  
Investment Bank ◽  
Over The Counter ◽  
Basel Accords ◽  
Lehman Brothers ◽  
The Global Financial Crisis ◽  
Almost All

In September, 2008, the meltdown of the investment bank Lehman Brothers accelerated the Global Financial Crisis, which affected economies and consumers worldwide. As soon as the Global Financial Crisis broke out, governments and legislators recognized the need for macroprudential reform in order to build a resilient financial system. Today, legislators in every major jurisdiction have finalized almost all major reforms that were envisaged once it had become clear that the crisis was also due to regulatory shortcomings. The reforms especially targeted (over-the-counter) derivatives and the equity base of banks. Following an analysis of the reasons for the Global Financial Crisis and the regulatory failures that contributed to its severity this article will discuss two major legislative responses that intend to make the financial system robust – the establishment of a central dearing obligation for over-the-counter derivatives and the revised Basel Accords on capital requirements for banks.

Editorial Introduction to the Symposium on the Global Financial Crisis

2009 ◽  
Vol 17 (2) ◽  
pp. 103-108 ◽  
Author(s):  
Sam Ashman
Keyword(s):  
United States ◽  
Political Economy ◽  
Financial Crisis ◽  
Economic Crisis ◽  
Global Financial Crisis ◽  
Banking System ◽  
Financial System ◽  
The United States ◽  
Editorial Introduction ◽  
The Global Financial Crisis

AbstractThe current global economic crisis is historically unprecedented in that it began when poor groups in the United States defaulted on their mortgage-payments and spread fear of 'toxic debt' through an internationalised financial system, bringing the banking system close to collapse and highlighting the very individualised nature of contemporary financial relations. The symposium explores contemporary finance and banking practices in the context of Marxist political economy seeking to develop the notion of financialisation and arguing that banks' increasing reliance on individual households as a source of profits amounts to a form of financial expropriation or additional profit generated in the sphere of circulation.

A Global Perspective on Securitized Debt

2018 ◽  
Author(s):  
Steven L Schwarcz
Keyword(s):  
United States ◽  
Financial Crisis ◽  
Capital Market ◽  
Global Financial Crisis ◽  
The United States ◽  
Global Perspective ◽  
Capital Markets Union ◽  
The Global Financial Crisis ◽  
Asset Backed Securities ◽  
The Eu

Securitisation represents a significant worldwide source of capital market financing. European investors commonly invest in asset-backed securities issued in U.S. securitisation transactions, and vice versa One of the key goals of the European Commission's proposed Capital Markets Union (CMU) is to further facilitate securitisation as a source of capital market financing as a viable alternative to bank-based finance for companies operating in the EU. To that end, this chapter explains securitisation and attempts to put its rise, its decline after the global financial crisis, and its recent CMU-inspired revival into a global perspective. It examines not only securitisation's relationship to the financial crisis but also post-crisis comparative regulatory approaches in the EU and the United States.

Impact of Government Bailout on Banks’ Cost of Equity: Additional Evidence from the Financial Bailout of 2008–2009

2021 ◽  
Vol 24 (01) ◽  
pp. 2150003
Author(s):  
Daphne Wang ◽  
Robert Houmes ◽  
Thanh Ngo ◽  
Omar Esqueda
Keyword(s):  
Institutional Ownership ◽  
The United States ◽  
Matched Sample ◽  
Cost Of Equity ◽  
Troubled Asset Relief Program ◽  
Low Concentrations ◽  
The Government ◽  
The Cost ◽  
Relief Program ◽  
Robust Evidence

The Capital Purchase Program (CPP) was the first and most significant program under the Troubled Asset Relief Program (TARP) during 2008–2009 financial crisis. This study evaluates the effect of the CPP during this period on the cost of equity of 170 publicly listed banks in the United States that received funding. To control for the potential effects of endogeneity on our results, we use a propensity score matched sample of non-CPP banks. Using this approach, we document robust evidence that the liquidity provided by the government bailout reduced the cost of equity for recipient banks, especially for those banks that repaid their bailout funds in full. This decrease in the cost of equity is particularly significant for banks with high market-to-book ratios, low concentrations of institutional ownership, and those banks with at least one large blockholder. Our findings have important implications for the assessment of government bailout programs and the future regulation of financial institutions.

scholarly journals Islamic Banking: The Firewall Against The Global Financial Crisis

2011 ◽  
Vol 28 (1) ◽  
pp. 9 ◽  
Author(s):  
Rohana Othman ◽  
Nooraslinda Abdul Aris ◽  
Rafidah Mohd Azli ◽  
Roshayani Arshad
Keyword(s):  
Financial Crisis ◽  
Global Financial Crisis ◽  
Free Market ◽  
Financial System ◽  
Capitalist System ◽  
Islamic Economic ◽  
The Global Financial Crisis ◽  
Financial Transactions ◽  
The Impact ◽  
Fundamental Values

The global financial crisis that devastated many of the worlds financial systems in a manner never seen before exposed the glaring weakness in risk management and interest-driven policies. The crisis brought the collapse of several iconic financial institutions once perceived to be too strong to capitulate. The crisis engulfed one economy after another from corporations to eventually bring about the collapse of governments of countries reeling from the impact of the crisis. Asset values plummeted and the crisis clearly demonstrated the fragility of the western capitalist system and the free market economy. The Islamic economic and financial system is anchored on universal honorable values, ideals and morals - honesty, credibility, transparency, co-operation and solidarity. These fundamental values uphold stability, security and safety in any financial transactions. Of paramount consideration is that the Shariah prohibits any economic and financial transactions that involve usury, lying, gambling, cheating, unsubstantiated risk or uncertainty (gharar), monopoly, exploitation, greed, unfairness and taking other peoples money unjustly. Another key aspect to the philosophy behind the Islamic financial system is money issued must be fully asset backed. It is impermissible to allow money to be traded for money except at par. Islam is not just the prohibition of riba and zakah (alms); it is a comprehensive system to fulfill societys basic necessities (food, clothing and shelter). History has demonstrated that Islam has the capacity to deliver and has succeeded in providing a viable economic system.

scholarly journals Deposit flows and structure in Serbia

Bankarstvo ◽  
2020 ◽  
Vol 49 (4) ◽  
pp. 68-87
Author(s):  
Milena Lazić ◽  
Ksenija Zorčić
Keyword(s):  
Financial Crisis ◽  
Global Financial Crisis ◽  
Banking System ◽  
Financial System ◽  
Banking Regulation ◽  
The Stability ◽  
The Global Financial Crisis ◽  
Deposit Guarantee Schemes

Having drawn attention to the existing banking regulation issues, the Global Financial Crisis also raised awareness of the importance of depositors' confidence for the stability of the financial system, and brought the role and significance of the deposit guarantee schemes to the fore. Serbian economy started experiencing its effects in Q4 2008, in parallel with the global spreading of the crisis. This paper focuses on the fluctuations in deposit levels and structure in the Serbian banking system, between 2008 and 2019. It also aims to underscore the importance and development perspectives of the Serbian deposit guarantee scheme.

scholarly journals Determinants of failure in Greek manufacturing SMEs

2017 ◽  
Vol 14 (3) ◽  
pp. 45-55 ◽  
Author(s):  
Efthalia Tabouratzi ◽  
Christos Lemonakis ◽  
Alexandros Garefalakis
Keyword(s):  
Financial Crisis ◽  
Financial Reporting ◽  
Fixed Effects ◽  
Global Financial Crisis ◽  
Manufacturing Sector ◽  
Bank Lending ◽  
Policy Implications ◽  
Z Score ◽  
The Government ◽  
The Global Financial Crisis

The globalization and the global financial crisis provide a new extremely competitive environment for small and medium sized enterprises (SMEs). During the latest years, the increased number of firms’ default has generated the need of understanding the factors of firms’ default, as SMEs in periods of financial crisis suffer from lack of financial resources and expensive bank lending. We use a sample of 3600 Greek manufacturing firms (9 Sectors), covering the time period of 2003-2011 (9 years). We run a panel regression model with correction for fixed effects in both the cross-section and period dimensions using as dependent variable the calculated Z-Score of each firm, and as independent variables several financial ratios, as well as the exporting activity and the use of International Financial Reporting Standards (IFRS Accounting Standards).We find that firms presenting higher performance in terms of ROA and sales and higher leverage levels that enhance their liquidity as well are healthier in terms of Z-score than their less profitable counterparts and acquire lower rates of probability of default: in other words, less risk. The results of the study can lead to policy implications for both Managers and the Government in order to enhance the growth of Greek manufacturing sector.

scholarly journals REGULATION OF SWAP AGREEMENTS WITH OTHER CENTRAL BANKS BY THE FEDERAL RESERVE SYSTEM OF THE UNITED STATES

2016 ◽  
pp. 0-0
Author(s):  
Мехти Галиб Мехтиев ◽  
Mekhti Galib Mekhtiev
Keyword(s):  
United States ◽  
Federal Reserve ◽  
Global Financial Crisis ◽  
Financial System ◽  
The United States ◽  
Federal Reserve System ◽  
Market Rate ◽  
The Global Financial Crisis ◽  
Global Financial System ◽  
Reserve System

The present article evaluates history of swap agreements’ application and their functioning system in the framework of intercentral bank relations (in particular by the Federal Reserve System of the United States (the Fed)). Swap includes two transactions: the first is a currency exchange on the spot market rate and the second is a future transaction on the rate defined in advance. This mechanism proved its efficiency within its application through history. In 1970s, during a radical transformation period of an entire global currency architecture caused by collapse of Bretton Woods’s system the Fed applied swap agreements to promote stability on financial markets and particularly on currency markets. Later during the Global Financial Crisis of 2008 these agreements again have become rescue measures for the global financial system, as the financial shock caused liquidity deficit for financial institutions and thus cut dramatically credit supply. And finally nowadays the global financial system is badly in need of swap agreements. The swaps’ force of attraction is that firstly it differs from crediting as the latter is one way currency extension, while swap agreement is the exchange of equivalent values. And secondly it fixes the rate of the future currency transaction what lightens both monetary regulation within national jurisdiction and regulation on the level of public international law.

Restructuring Measurements Impact on Bank Risk After the Global Financial Crisis — Empirical Evidence from Vietnam

2021 ◽  
pp. 2150019
Author(s):  
Tu T. T. Tran ◽  
Yen Thi Nguyen
Keyword(s):  
Financial Crisis ◽  
Commercial Banks ◽  
Global Financial Crisis ◽  
Banking System ◽  
The State ◽  
Bank Risk ◽  
The Government ◽  
The Global Financial Crisis ◽  
Bank System ◽  
The Impact

Project 254 signed in November 2011 which is relating to “Restructuring the system of credit institutions in the period of 2011–2015” has been considered as a milestone in marking the Vietnamese government to prevent the influence of the financial crisis of 2008. This paper identifies hypotheses evaluating the impact of restructuring measurements on the risk of the Vietnamese’s commercial banks in 10 years, starting from 2008. Using the OLS regression method for analysis by running Eviews and ANOVA test in SPSS with a unique database of 216 observations of 31 commercial banks in Vietnam, it was found that: (i) The bail-out activities of the State Bank of Vietnam in 2015 does not influence on bank risk, (ii) The mergers and acquisitions (M&A) do not support the bank to reduce risk, it increases the risk for acquiring banks, (iii) The global crisis 2008 exerts dire consequence on the bank system in Vietnam, (iv) There is the difference of risk among the groups of the bank experiencing a different number of years of operation. Basing on this result, the paper also makes recommendations to the Government, The State Bank of Vietnam and the commercial banks for effective risk management toward the development of the Vietnamese banking system.

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