...has inherent risk management tools to prevent the crisis. This paper attempts to examine the root of the financial crisis and find the solution from Islamic finance principles. Keywords: Financial crisis, Derivative, MBS, CDO, CDS, Islamic finance 1 Corresponding author can be contacted by email: miranti_k_dewi@yahoo.com. “The credit and capital markets have grown too rapidly, with too little transparency and accountability. Prepare for an explosion that will rock the western financial system to its foundations.” (Barberton and Lane (1999) INTRODUCTION As mentioned by Barberto and Lane (1999), the explosion just became a reality. Though the crises in the US and Europe were one of the crises series which regularly hit the world starting from the 20th century,...
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...Throughout the history and even today we often hear about the term financial crisis. Every day on the news we can hear about the financial crisis in some countries and how they are trying to prevent it or to get out of it. Especially about the financial crisis in Greece. So what exactly is financial crisis? There have been a lot of definition of what financial crisis is, but they all agree in one thing financial crisis appears when some institution or assets suddenly lose a large part of their value. In the 19th and early 20th centuries, many financial crises were associated with banking panics, and many recessions coincided with these panics. Other situations that are often called financial crisis include stock market crashes and the bursting of other financial bubbles, currency crises and sovereign defaults. There a lot of types of financial crisis: banking crisis, speculative bubbles and crushes, wilder economic crisis and other crisis. But from all of them, today the most frequent financial crisis is the banking crisis. This happens when a lot of the depositors withdraw their deposits from the bank, causing the bank to bankrupt. This kind of crisis happened in 2007-2008,also known as the global financial crisis and 2008 financial crisis. This crisis is considered by many economists to be the worst financial crisis since the Great Depression. This crisis was called the worst because it was spreading really quickly all around the world. But what causes this kind...
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...09-093 July 22, 2009 The Global Financial Crisis of 2008 – 2009: The Role of Greed, Fear and Oligarchs Cate Reavis Free enterprise is always the right answer. The problem with it is that it ignores the human element. It does not take into account the complexities of human behavior. 1 —Andrew Lo, Professor of Finance, MIT Sloan School of Management The problem in the financial sector today is not that a given firm might have enough market share to influence prices; it is that one firm or a small set of interconnected firms, by failing, can bring down the economy. 2 —Simon Johnson, Professor of Entrepreneurship, MIT Sloan School of Management, Former Chief Economist, IMF On October 9, 2007 the Dow Jones Industrial Average set a record by closing at 14,047. One year later, the Dow was just above 8,000, after dropping 21% in the first nine days of October 2008. Major stock markets in other countries had plunged alongside the Dow. Credit markets were nearing paralysis. Companies began to lay off workers in droves and were forced to put off capital investments. Individual consumers were being denied loans for mortgages and college tuitions. After the nine day U.S. stock market plunge, the head of the International Monetary Fund had some sobering words: “Intensifying solvency concerns about a number of the largest U.S.-based and European financial institutions have pushed the global financial system to the brink of systemic meltdown.” 3 1 2 3 Interview with the case writer...
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...IT and International Real-Time Media: Amplifier for a Crisis or Instrument of Rational Decision-Taking Narelle Gomes, Christian Piechorowski 09.01.2014 Table of contents: 1.1 Information technology’s impact in the development of the stock exchange 1.2 Algorithmic trading 1.3 High frequency trading 1.4 High frequency; trading beneficial or harmful for the economy? 1.5 Final Remarks 2.1 The Influential Role of Mass Media - The Pervasiveness of the information disseminated on the people 2.2 Financial Crisis- A media spectacle? 2.3 The mishaps of European Media during the current Euro crisis 2.3.1 The alternative view of the media; Citizens mistrust towards the media 2.3.2 The wavering power of mainstream amidst its pervasiveness 3. Conclusion Introduction Problem Description: The world financial crisis started in the US with the burst of the housing bubble in 2007. However, it was not just limited to the US border, but it rapidly spread all over the world. Consequently, many banks went bankrupt and some countries were even pushed into a financial downturn. Target of Study: This essay will not provide a general outlook on the financial crisis but instead examines the impact of the Real time media and IT on this economic crisis of historic scale. How important...
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...DA CRISE FINANCEIRA À CRISE DA DÍVIDA SOBERANA: UM DEBATE SOBRE A POLÍTICA FISCAL Celso Pereira Neris Junior* Mário Augusto Bertella** Resumo: A crise financeira de 2007 trouxe à tona a discussão sobre a política fiscal. Esta foi empregada como forma dos governos atenuar os impactos econômicos e sociais potenciais da crise, uma vez que apenas o expediente monetário não daria conta do processo. Historicamente, crises bancárias engendram aumentos das dívidas públicas, não somente pelas operações de socorro, mas também pelas políticas de gasto primário dos governos e/ou, como na crise recente, pela compra de ativos financeiros “tóxicos”. A discricionariedade da política fiscal é colocada em discussão, uma vez que, sendo ela imprescindível, requerem-se ações coordenadas e bem articuladas para que os países consigam mitigar suas respectivas crises atuais e futuras. Palavras-chave: Crise Financeira; Crise da Dívida; Política Fiscal Abstract: The financial crisis of 2007 brought the discussion of fiscal policy. This was used as a way for governments to mitigate the potential social and economic impacts of the crisis, since only the monetary policy would not be effective. Historically, banking crises engender increases in public debt, not only for the relief operations, but also by the policies of government primary spending and/or, as in the recent crises, by the purchase of the “toxic” financial assets. The discretionary fiscal policy is then discussed, since it is essential, it is...
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...As far as we know, there were more than five economic and financial crises during the recent 200 years. Society was suffering from such downturns, because each of them had its own characteristics and consequences which affected the whole economic world. In the next passages I would like to tell you about the history of financial crises and about the solutions made by governments and departments which helped to reduce the bad effects of it. Not a single year has gone by in the past two centuries where there was not a financial crisis somewhere in the world (see figure 1). Arguably, the world witnessed its first international financial crisis in 1825. The opening up of Latin America after the overthrow of the Spanish empire led to the opening up of international trade between England and the Latin American republics. The result was massive capital flows from London to finance infrastructure, mining and government spending. But once the capital outflows impinged on the Bank of England’s (BoE) gold reserves, the policy rate was raised, leading to a banking crisis. A sudden stop of capital flow from London resulted in banking panics in the US and currency crashes across Latin America. Figure 1: The history of financial crises Indeed, the crisis in 1825 marked the first of seven clusters of sovereign defaults in the period 1800 to 2010 In the first cluster of defaults, which happened during 1824-1834, 13 Latin...
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...can be traced by past experience from different countries around the world as usual. Their book and working papers introduce massive historical database which have constructed to study the debt (both external and internal), banking crisis, inflation, currency crashes and so forth. There are sixty-six countries included in the data, such as Africa, Asia, Europe, Latin America, North America, and Oceania (Reinhart and Rogoff, 2008). They studied various types of financial crises, however, the book mainly includes sovereign defaults and banking crises as these two forms of crises are particularly relevant to modern society. They covered government debt defaults in eight centuries all over the world as the title of the book. Basically, their views in term of the financial crisis in 2007 and 2008 are that the U.S Subprime Meltdown and the so-called ‘ The Second Great Contraction’ was inevitable. They criticized that if the policy markers could do some research on the recent history of financial crises, then the whole society might have some protection about it....
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...THE EURO IN CRISIS Objective Of Study The objective of the following study is to understand and analyse the recent euro debt crisis which led to the temporary fall of the euro. Through this study, attempt has been made to single out EU member countries and the events in those countries that led to the crisis. Policy recommendations have also been stated to further help the main objective of dissecting and understanding the problem. INTRODUCTION Over the last two years, the euro zone has been going through an agonizing debate over the handling of its own home grown crisis, now the ‗euro zone crisis‘. Starting from Greece, Ireland, Portugal, Spain and more recently Italy, these euro zone economies have witnessed a downgrade of the rating of their sovereign debt, fears of default and a dramatic rise in borrowing costs. These developments threaten other Euro zone economies and even the future of the Euro. Such a situation is a far cry from the optimism and grand vision that marked the launch of the Euro in 1999 and the relatively smooth passage it enjoyed thereafter. While the Euro zone may be forced to do what it takes, it is unlikely that the situation will soon return to business as usual on its own. Yet, this crisis is not a currency crisis in a classic sense. Rather, it is about managing economies in a currency zone and the economic and political tensions that arise from the fact that its constituents are moving at varying speeds, have dramatically different fiscal capacities...
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...beyond national borders, whilst increasing the interconnectedness of different markets and cultures. These economic ties come in the forms of international trade, foreign direct investment and monetary integration, made possible with the complementary increase in the interdependence of international financial markets. With further liberalization and deregulation, financial market interdependence grew in momentum alongside the worldwide capital mobilization. This growing interconnectedness of all the world financial markets and the degree of their interdependence have themselves created a subject of substantial interest among economists. The recent global financial crisis has only elevated this interest further, as the impact of U.S. subprime crises on the world economies have provided evidence of global financial markets interdependence. Many international stock markets, for example, experienced their worst abrupt declines in their history with drops of around 10%, triggered moments after the collapse of Lehman Brothers hit the U.S. financial markets. Even the Bursa Malaysia KLCI was not spared, dropping to its lowest point in...
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...THE EAST ASIAN CRISIS Introduction: The East Asian crisis was a period of financial crisis that gripped much of Asia which beginning in July 1997 and raised fears of worldwide economic meltdown due to financial contagion.1 Several countries such as Malaysia, Thailand, Indonesia, the republic of Korea and the Philippines were hit directly while others such as Taiwan province of China, Singapore and especially Hong Kong, China were badly affected. What began as a speculative attack on the Thai baht in July 1997 quickly spread as ‘contagion’ to the other countries. Over a three-month period between July and October 1997, the baht fell nearly 40 per cent, the Malaysian ringgit and Philippine peso by about 27 per cent, the Indonesian rupiah by about 40 per cent and the Korean won approximately 35 per cent against the United States dollar. For countries that had been dubbed “miracle economies” this was a serious blow with wide-ranging economic, social and political ramifications.2 In this paper we would try to undertake an empirical analysis of the factors leading to the crisis by analysing on two major points: 1) How have these countries performed in the years leading to the crisis? 2) What was the policy response to the currency crisis and what similarities/differences were there in policy responses across countries? We try to do this by analysing the macroeconomic data of three countries, Malaysia, Thailand and the Republic of Korea, over a 13-year period, from 1990 to 2002. The...
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... Indeks: 9532 Strumica,dekemvri 2012 Throughout the history and even today we often hear about the term financial crisis. Every day on the news we can hear about the financial crisis in some countries and how they are trying to prevent it or to get out of it. Especially about the financial crisis in Greece. So what exactly is financial crisis? There have been a lot of definition of what financial crisis is, but they all agree in one thing financial crisis appears when some institution or assets suddenly lose a large part of their value. In the 19th and early 20th centuries, many financial crises were associated with banking panics, and many recessions coincided with these panics. Other situations that are often called financial crisis include stock market crashes and the bursting of other financial bubbles, currency crises and sovereign defaults. There a lot of types of financial crisis: banking crisis, speculative bubbles and crushes, wilder economic crisis and other crisis. But from all of them, today the most frequent financial crisis is the banking crisis. This happens when a lot of the depositors withdraw their deposits from the bank, causing the bank to bankrupt. This kind of crisis happened in 2007-2008,also known as the global financial crisis and 2008 financial crisis. This crisis is considered by many economists to be the worst financial crisis since the Great Depression. This crisis was called the worst...
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...Journal of Contemporary Eastern Asia ISSN 2383-9449 Fumitaka Furuoka, Beatrice Lim, Catherine Jikunan and Lo May Chiun (2012) Economics Crisis and Response: Case Study of Malaysia’s Responses to Asian Financial Crisis Journal of Contemporary Eastern Asia Vol. 11, No. 1: 43-56 Journal abbreviation: J. Contemp. East. Asia Stable URL: http://eastasia.yu.ac.kr/documents/Fumitaka_11_1.pdf www.JCEA-Online.net Open Access Publication Creative Commons License Deed Attribution-No Derivative Works 3.0 Journal of Contemporary Eastern Asia, Volume 11, No.1: 43-56 http://dx.doi.org/10.17477/jcea.2012.11.1.043 Economics Crisis and Response: Case Study of Malaysia’s Responses to Asian Financial Crisis Fumitaka Furuoka, Beatrice Lim, Catherine Jikunan and Lo May Chiun The paper chooses the “Asian Financial Crisis” as a case study to examine its impact on Malaysian economy and describes how Malaysian government responded to the crisis. It also focuses on the Asian financial crisis’ impact on the employment of banking sector in Malaysia. In the finance, insurance, real estate and business service sector, a number of 6,596 workers were retrenched. Banks were forced into mergers and acquisition as well as downsizing, trim lean, organizational changes and introduction of new technologies. Excess workers were offered a “voluntary separation scheme.” These retrenched workers became the urban poor facing high cost of living and no opportunity for jobs as there is no safety net provided. 1. Introduction...
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...Zombie Bank The book presents an in-depth overview on what a zombie banks is, why they are allowed to operate, and why the approach will inevitably fail. Through the use of exclusive reports from bank executives, regulators, politicians, and policymakers, Onaran takes the reader on a global tour of these banks—which are being kept alive in countries from the United States to Germany, Spain, and Japan. Two of the largest, Bank of America and Citibank, are in the United States. In Zombie Banks, the author has shown us the practice of zombie banking, explained why it does not work, and laid out the steps needed to rid the global financial community of these dangerous institutions. Zombie bank started to appear in 1990s with the huge declining of the price of real estate and stocks. It pulled every Japanese banks into huge bad debt situation. However, Japan refused to accept the suggestion from the US and took a way that government secretly support those bad debt banks instead of bankrupt. This solution do nothing good to the improvement for its financial situation and made Japan’s economy depressed for a decade. While covering the collapse of Lehman Brothers and Bear Stearns in 2008, Onaran discovered that no one within those organizations had the complete picture of how the companies functioned and, therefore, no one had any answers. Zombie Banks is Onaran’s attempt to connect the dots that make up the current global financial landscape. Zombies are...
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...Midlife crisis or transition is a very common effect usually followed by an event. The age is generally 37 to 50 years old, and it is my opinion that a transition or crisis is mostly inevitable. Everyone goes through significant events, some tougher or less common than others, but all the same we have to adjust to these events. The terms midlife crisis or midlife transition is both appropriate for this time in an adult stage of life. I see a transition being more for someone who is adjusting to their children going off to college. Meanwhile, midlife crisis is termed more for a man going out and buying a sports car. Therefore, I see that midlife “crisition” is an appropriate slang I will use now that I have been more informed of the criteria. Some adjustment during midlife is normal; adjustments throughout every stage of life are normal. During this time in life there are many significant events that occur and are the cause to our actions and thus, a “in general” timeframe of common events that occur for everyone, so I do personally believe that it is inevitable to experience some kind of midlife crisis or transition. I hope to fulfill each need as a woman and also as a person that I wouldn’t react in a negative way when the inevitable event comes of my children going off to college or something unexpected occurs. We can never truly prepare ourselves for every event because our lives are not written out on manual though we do have a basic understanding and path that we expect...
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...------------------------------------------------- ------------------------------------------------- Group Studies Vs Individual Studies Submitted To Sir. Syed Hassan Naqvi Submitted from Abdul Majeed MBA3Y02111014 University of Lahore LBS Lahore Business School Contents Chapter 1 3 Introduction 3 Objective: 3 Research questions 3 Hypothesis 3 Null Hypothesis 3 Chapter 2 4 Literature 4 Chapter 3 5 Methodology 5 Chapter 4 6 Strategies for data analysis 6 Chapter 5 7 Findings and Conclusion 7 Bibliography 8 Chapter 1 Introduction Most successful careers involve team work. Study groups can help you in classes with huge reading lists, multiple writing assignments, lots of course specific jargon, and long problem sets. It’s helpful to recognize that everyone brings value to a group and to be aware of making assumptions or judgments. Studying in groups…refreshes my memory on course material, makes aware of information missed during class or didn’t quite understand, and gives new ideas and perspectives on class topics. On the other hand, Most of the students choose to enroll in independent study because they have educational needs and interests not covered by the standard curriculum. Others may only need an additional credit or two to fulfill a requirement, and it's more economical to choose an independent course with variable credit hours than to enroll in an elective course costing twice as much. In some fields...
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