Financial and Banking Crisis Research Papers (original) (raw)
Decentralized internal rating based models (self-regulation) which are substituted to public regulation are not able to hold a long-term macroeconomic vision or to take into account interdependencies among private units and markets.... more
Decentralized internal rating based models (self-regulation) which are substituted to public regulation are not able to hold a long-term macroeconomic vision or to take into account interdependencies among private units and markets. Therefore, they seem to be unable to tackle with systemic crises. Moreover, liberal supervision schemes reduce the field of action of monetary authorities and limit the systemic range of their interventions in case of large crisis. Then the absence of macro-regulatory schemes reveals to be one of the causes of the appearance and the persistency of generalized financial crises. A reappraisal of the Minskian financial instability hypothesis and the results of models of conventions, of financing by LBO and of cognitive dissonance points out that the current financial crisis casts doubt on two principles of the way of regulation of modern capitalism: 1) The capacity of market mechanisms for correcting errors of judgment of decentralized actors without structural public interventions; 2) The efficiency of the self-regulation of markets regarding public regulation schemes. These principles turn out to be unable to ensure the continuity in market relations under their present form. So, new research becomes compulsory in order to imagine new macro-prudential mechanisms seeking to strengthen the viability of economic and monetary relations.
Over the past 15 years, Russia’s model of political-economy has evolved around three main channels of global economic integration: 1) export of natural resources and a national system of redistribution of export revenues; 2)... more
Over the past 15 years, Russia’s model of political-economy has
evolved around three main channels of global economic integration: 1) export of natural resources and a national system of redistribution of export revenues; 2) financialisation, acting as a boost for domestic consumption/demand; and 3) the offshore integration of Russian capital into global capital markets. The current crisis is affecting all three channels of Russia’s global political economy. Together, reduced
export revenues, the deepening financial crisis and the dominance of offshore-sourced investments into Russia, serve as crisis transmission mechanisms, and thus constitute three sets of (inter-related) dilemmas for the Russian authorities. Four scenarios of possible development of the current situation are provided.
Using signal extraction, this study identifies leading indicators of financial crisis over the period 1980-2015 in developing and advanced economies. The study evaluates vulnerability in the external, public and financial sector in... more
Using signal extraction, this study identifies leading indicators of financial crisis over the period 1980-2015 in developing and advanced economies. The study evaluates vulnerability in the external, public and financial sector in developing countries. The results postulate that the level of imports is the principal leading indicator for detecting a forthcoming crisis in developing nation's external sector. In the public sector, the best indicators for predicting a crisis in South Africa are in the order: maturity of debt; external debt; debt-GDP ratio; interest rate payments; short-term debt and government expenditure. In Namibia, the best indicator for predicting crisis is total expenditure and interest rate payments. Comparatively, Russia's crises are better predicted by the following variables: debt ratio; interest rate payments; short-term debt; expenditure and external debt. The two best indicators were debt ratio and interest rate payments. In the financial sector, the common risk indicator among developing economies is the lending rate. The external balance sheet assessment shows that in developed countries, predictors of a financial emanate from portfolio investments and direct investments. For the UK, the best indicators of a looming financial crisis are: direct investment liabilities; portfolio debt liabilities and direct investment debt instruments. Contribution/Originality: This study is one of the first contributions in early warning systems that assesses vulnerability in multiple sectors of an economy which are external, public and financial sectors. To the best of the author's knowledge, this study is also the first to determine external balance sheet assessment in developed nations.
This paper analyzes the impact of debt forgiveness on economic equilibrium. Since the root cause of an economic crisis is debt, eradicating the root may solve the problem. However, it does not prevent future crises from occurring. It is... more
This paper analyzes the impact of debt forgiveness on economic equilibrium. Since the root cause of an economic crisis is debt, eradicating the root may solve the problem. However, it does not prevent future crises from occurring. It is found that debt relief in a global scale can help reach economic equilibrium, but there are challenges to its practicality due to behavioural economics.
Decentralized internal rating based models (self-regulation) which are substituted to public regulation are not able to hold a long-term macroeconomic vision or to take into account interdependencies among private units and markets.... more
Decentralized internal rating based models (self-regulation) which are substituted to public regulation are not able to hold a long-term macroeconomic vision or to take into account interdependencies among private units and markets. Therefore, they seem to be unable to tackle with systemic crises. Moreover, liberal supervision schemes reduce the field of action of monetary authorities and limit the systemic range of their interventions in case of large crisis. Then the absence of macro-regulatory schemes reveals to be one of the causes of the appearance and the persistency of generalized financial crises. A reappraisal of the Minskian financial instability hypothesis and the results of models of conventions, of financing by LBO and of cognitive dissonance points out that the current financial crisis casts doubt on two principles of the way of regulation of modern capitalism: 1) The capacity of market mechanisms for correcting errors of judgment of decentralized actors without struct...