scholarly journals UNDERSTANDING FINANCIAL CRISIS: A THEORETICAL ANALYSIS

2003 ◽  
Vol 2 (1) ◽  
pp. 1-10
Author(s):  
P.K. Sudarsan
Keyword(s):  
Financial Crisis ◽  
Theoretical Analysis ◽  
Financial Crises ◽  
Currency Crisis ◽  
East Asian ◽  
Banking Crises ◽  
Policy Suggestions ◽  
Proper Diagnosis ◽  
Three Stages ◽  
Positive Results

Financial crises and their sub set banking crises have become worldwide phenomena in recent years. Understanding of financial crises assumes importance because the success of policy prescriptions to cure these crises depends to a large extent on the proper diagnosis of these crises. The objective of this paper is to provide a theoretical analysis to understand the financial crisis in a better way. The poper conjectures three stages in the financial crisis: confidence crisis, currency crisis and financial crisis. Paper shows that confidence crisis leads to the currency crisis and currency crisis in turn advances into the financial crisis. The paper also highlights the two-way linkage between currency crisis and financial crisis and its implications on policy suggestions. The two-way linkage between the currency crisis and financial crisis makes the policy prescriptions difficult. IMF policy to cure the East Asian crisis failed initially mainly because of this reason. The theoretical analysis reveals that a judicious mix of different policies would be the best remedy for the financial crisis of the type occurred in East Asia, though this would take some time to show positive results.

Confronting Banking Crises: Lessons from the Field

2021 ◽  
Vol 13 (1) ◽  
Author(s):  
Marc Dobler ◽  
Marina Moretti ◽  
Alvaro Piris
Keyword(s):  
Financial Crisis ◽  
Online Publication ◽  
Financial Crises ◽  
Global Financial Crisis ◽  
Banking Crises ◽  
Lessons Learned ◽  
Annual Review ◽  
Publication Date ◽  
Policy Interventions ◽  
Comprehensive Framework

Financial crises are a recurring feature of modern economies. This article summarizes the lessons learned from policy interventions and tools used to resolve banking crises from a practical, operational perspective and in light of the experiences and challenges faced during and since the 2008 global financial crisis. Managing a systemic banking crisis is a complex, multiyear process and requires a comprehensive framework for addressing systemic banking problems while minimizing taxpayers’ costs. Expected final online publication date for the Annual Review of Financial Economics, Volume 13 is March 2021. Please see http://www.annualreviews.org/page/journal/pubdates for revised estimates.

scholarly journals GLOBAL FINANCIAL CRISES AND ECONOMIC GROWTH : EVIDENCE FROM EAST ASIAN ECONOMIES

2012 ◽  
Vol 15 (2) ◽  
pp. 35-54
Author(s):  
Arisyi F. Raz ◽  
Tamarind P. K. Indra ◽  
Dea K. Artikasih ◽  
Syalinda Citra
Keyword(s):  
Economic Growth ◽  
Financial Crisis ◽  
Financial Crises ◽  
Global Financial Crisis ◽  
East Asian ◽  
Economic Fundamentals ◽  
Short Period ◽  
Asian Economies ◽  
East Asian Economies ◽  
The Impact

As economies become more integrated in the midst of globalization, financial crisis that occurs in one country can easily transmit to other countries, becoming global financial catastrophe in a short period of time. In such event, strong economic fundamentals are particularly important to defend a country from the contagious effect of the crisis. As evidence, due to the fragile economic fundamentals and lacking government credibility, East Asian economies were easily attacked by the crisis in 1997 once the sentiment deteriorated. Nevertheless, the region had learned its lessons in 1997 thereby proofing its resilience in facing the global financial crisis that struck in 2008 by improving its economic fundamentals as well as policymakers’ credibility. This paper starts with theories on economic growth and financial crisis. Further, it empirically examines to what extent the financial crises in 1997 and 2008 affect East Asian economies by using panel data econometrics. The evidence shows that, even though both crises have contributed adverse impacts on East Asian economies, the magnitude of the 2008 crisis was relatively less severe than that in 1997. Finally, this study also provides further discussions regarding how East Asian economies had successfully minimized the impact of the global crisis in 2008. Keywords: Global Financial Crises; East Asian Economies; Economic Growth;Financial Market; Random and Fixed EffectsJEL Classification: C330, E440, G010

scholarly journals Sudden Changes In Volatility In European Stock Markets

2014 ◽  
Vol 30 (6) ◽  
pp. 1567
Author(s):  
Khaled Guesmi ◽  
Frederic Teulon ◽  
Zied Ftiti
Keyword(s):  
United Kingdom ◽  
Financial Crisis ◽  
Stock Markets ◽  
Regime Switching ◽  
Currency Crisis ◽  
East Asian ◽  
Subprime Crisis ◽  
Asian Currency Crisis ◽  
European Stock Markets ◽  
The U.S

This paper studiesthe volatility in ten Europeanstock markets (Denmark, France, Germany, Ireland, Italy, Netherland, Spain, Sweden,Switzerland and United Kingdom) during the periods of financial crisis (East Asian currency crisis, Subprime crisis) from 1990 to 2012. We apply Markov Regime Switching SW-GARCHmodel. Our results show that mostof the European stock markets are closely interlinked to the U.S.

scholarly journals The Twin Crises: The Causes of Banking and Balance-of-Payments Problems

1999 ◽  
Vol 89 (3) ◽  
pp. 473-500 ◽  
Author(s):  
Graciela L Kaminsky ◽  
Carmen M Reinhart
Keyword(s):  
Economic Activity ◽  
Financial Crises ◽  
Currency Crises ◽  
Banking Sector ◽  
Financial Liberalization ◽  
Currency Crisis ◽  
Banking Crises ◽  
Balance Of Payments ◽  
Capital Inflows ◽  
The Subject

In the wake of the Mexican and Asian currency turmoil, the subject of financial crises has come to the forefront of academic and policy discussions. This paper analyzes the links between banking and currency crises. We find that: problems in the banking sector typically precede a currency crisis—the currency crisis deepens the banking crisis, activating a vicious spiral; financial liberalization often precedes banking crises. The anatomy of these episodes suggests that crises occur as the economy enters a recession, following a prolonged boom in economic activity that was fueled by credit, capital inflows, and accompanied by an overvalued currency. (JEL F30, F41)

scholarly journals THE GLOBAL FINANCIAL CRISES AND THEIR TYPES

2015 ◽  
pp. 271-277
Author(s):  
E. V. Vasina
Keyword(s):  
Financial Crisis ◽  
Interest Rates ◽  
Financial Crises ◽  
Debt Crisis ◽  
Currency Crisis ◽  
Banking Crisis ◽  
Real Economy ◽  
International Financial Crises ◽  
Markets And Institutions ◽  
Asset Class

In this study the author reveals the essence of the financial crisis and examines the various types of financial crises. By studying the literature on financial crises, the author of the studypays attention to three specific areas: the definition of the crisis, the manifestations of the crisis and the types of financial crises. The article notes that the term "financial crisis" is widely used in a variety of situations in which some financial assets suddenly lose most of their nominal value, but it does not necessarily lead to changes in the real economy. The financial crisis is a crisis that is systematically covers financial markets and institutions of the financial sector, international finance, money circulation and credit, state, municipal and corporate finance. Financial crises have common elements, but they come in different forms. Financial crises are generally multidimensional events and are difficult to characterize using a single indicator. The author considers the following types of financial crises: a banking crisis, a currency crisis, speculative bubbles and international financial crises. Banking crisis is a situation when a bank faces with a sudden outflow of depositors' funds. A currency crisis is a situation when the exchange rate, which is pegged to the currency of another country, is on the verge of collapse, causing committed speculation. A speculative bubble is in the case of large, sustainable overpricing of any asset class. Financial crises are reflected in a sharp rise in interest rates, a collapse in exchange rates, massive withdrawal of deposits from banks and credit crunch, currency and debt crisis.

A New Approach to the Cause and Progress of Financial Crisis for the Management of a Firm and the Nation

2020 ◽  
Vol 21 (1) ◽  
pp. 54-75
Author(s):  
Yongshik Choe ◽  
Hyun-jung Kim
Keyword(s):  
Financial Crisis ◽  
Financial Crises ◽  
Business Management ◽  
Time Shift ◽  
New Approach ◽  
Financial Variables ◽  
Credit Creation ◽  
Three Stages ◽  
Successful Business ◽  
Better Than

In this paper, we try to reveal the principles that cause the processing stages of economic crisis as follows. First, most of economic crises are caused by a financial crisis because financial variables have the biggest variation in the economy as the principles of credit creation and credit destruction work altogether. Second, most of financial crises go through three stages of manias, panics, and crashes as Kindleberger clarified. Third, manias are caused by the time-shift of demand from the future which increases further the current demand and raises the prices of real estate and stocks. Fourth, panics are caused by the hollowing-out of demand which is caused eventually by the demand time-shift, with bubbles broken. Fifth, crashes are caused by the principle of credit destruction which decreases the money amount by the credit multiplier, resulting in a financial crisis. When this principle of financial crisis is understood well, it would be possible to foresee the development of the financial crisis and to prevent some damages such as a bankruptcy due to a sudden lack of liquidity. Then the crisis management would be performed better than before. This paper would contribute to a successful business management and to the evolution of economics.

scholarly journals Japan’s financial crisis in 1992 and unbalanced incentives

2014 ◽  
Vol 11 (3) ◽  
pp. 388-398
Author(s):  
Yutaka Harada
Keyword(s):  
Corporate Governance ◽  
Financial Crisis ◽  
Financial Institutions ◽  
Financial Crises ◽  
Banking Crises ◽  
Monetary Base ◽  
Bank Supervision ◽  
The Future ◽  
Ministry Of Finance ◽  
Bad Loans

In this paper the author analyzes corporate governance in the wake of a financial crisis. In Section 1, the author will explain why the banking crises occurred and how we can avoid them in the future. And in Section 2, there will be discussion on Japan’s financial crises in 1990s, focusing on why Japan’s financial authorities delayed efforts to resolve the NPL issue and why they did not try to expand the monetary base. The bank supervision authority (Ministry of Finance at that time) and financial institutions had incentives to delay the disposal of bad loans. They wanted to cloud their responsibilities by delaying the disposal. Their strategy had the desired effect, as many escaped their responsibilities because of the delay

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