...Impact of the Asian Financial Crisis in 1997 and effect to Latin America Name: Institution: Date: Abstract In 1997, the Asian Financial Crisis spread rapidly all over the Asia and affected almost all the economies in the world. Prior to the Asian Financial Crisis, the Asian countries such as Thailand, Malaysia, South Korea, Indonesia, Hong Kong and Singapore experienced a remarkable growth in the economy that was considered the highest in the world. These Asian economies increased by a notable proportion of 6 to 10 percent annually in the GDP. However, what had been regarded as an Asian miracle seemed to crumple down rapidly 1997 when these Asian countries were faced with a severe financial crisis in their local stock and currency markets. When the economies started recovering from the crisis in 1998, the stock markets in several countries had considerably lost more than 70 percent of their worth, while their currencies depreciated in comparison to the US dollar (Pettis, 2001). The Asian Financial Crisis also affected several nations in the Latin America as they experienced a relentless economic meltdown that had detrimental effects to the economies. For instance, the financial crisis force multinational firms to close down due to liquidation, the banking system deteriorated and this forced high levels of lay-offs leading to unemployment. In addition, the financial crisis resulted in the loss of the people’s purchasing power in the Latin American while nations turned to...
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...The contagious impact of the European sovereign debt crisis on the foreign exchange market 1. Introduction In 2010, the debt crisis caused the euro to go down 10% in a three-month period. Some largest hedge funds in America discovered this opportunity and short euro in groups to an enormous scale. Later on, the British pound is being infected. It continuously dropped for six days, which wrote the longest dropping period record. In this paper, the objective is to critically analyse how the European sovereign debt crisis affects foreign exchange markets. The theme focuses on the contagion on the markets. The contagion phenomenon exists between foreign exchange spot and derivative markets. One of the channels is the investor sentiment, which makes large scale of influences on both markets and volatility dynamics (Corredor, P., Ferrer, E., Santamaria, R., 2015). It makes sense on aspects like trading volume, effective transaction costs and so on. This paper has two main parts. The first part is to evaluate impacts on foreign exchange spot market through analysing the political channel, bank channel and financial markert channel. The second part is to investigate impacts on foreign exchange derivatives, especially on the foreign exchange swap. 2. Contagious impact on the foreign exchange market 2-1 Impacts on foreign exchange spot (impacts on euro) In this part, we explain how the debt crisis makes impacts on the foreign exchange spot market, especially, we focus...
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...THE GLOBAL FINANCIAL CRISIS AND ITS IMPACT ON THE FINANCIAL SECTOR IN JORDAN: APPLIED STUDY ON FINANCIAL COMPANIES LISTED IN AMMAN STOCK EXCHANGE Fayez J.S. Alnajjar, Jadara University, Irbid, Jordan. Mahmood I. Noor, Al-Isra Private University, Amman, Jordan. Nazem M.M. Al-ahmad, Jadara University, Irbid, Jordan. Suzan S. Issa, University of Petra, Amman, Jordan. ABSTRACT The study adopted a comprehensive survey of companies listed on the Amman Stock Exchange, in order to identify the most important effects of the global financial crisis on the financial sector in general, and its constituent sectors particularly in Jordan, Through the movement of the index for each sector of the financial sectors, the study found that Jordan like other countries in the world has been affected by the global financial crisis, but to a lesser extent due to the lack of modern financial instruments in the financial market such as derivatives. The study found also that the financial sectors in Jordan has recorded a sequential decline it was most severe in the diversified financial services sector, followed by the real estate sector and the banking sector varied, then the insurance sector, where it notes that the diversified financial services sector and real estate sector have been a sharp rise at the beginning of 2008 so they are the most affected at the time of the global financial crisis, as shown by the similarity of the study of vulnerability to a large extent. The study also found that the financial...
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...Abstract The global financial crisis in 2007 started in mortgage market then quickly went to the every other corner of the economies. The most well known reason for the collapse of financial system was investor’s confidence. Investors in stock market have taken a huge a mount of money out of stock market and destroyed liquidity of the market. Without the advantage of liquidity, every stock began to fall. The panic of investors came from the anticipation of the future market. This paper will investigate if the stock price correctly reflected the health of business or it was only the fear of investors. I will use the most famous market indicator: Down Jones Index and net profit from incomes statement of 30 stocks in Down Jones Index. Down Jones index uses 30 large value stocks in the market to represent the entire market. We expect to see if the Down Jones Index line shared the trend with the profit of 30 companies in Down Jones index. Introduction Financial Market during the Great Recession “It is well known that the Lehman Brothers’ default severly increased counterparty risk because the failed company had $729 billion of notional derivative contracts” From:STOCK MARKET REACTION TO THE GLOBAL FINANCIAL CRISIS: TESTING FOR THE LEHMAN BROTHERS' EVENT by Leonardo Becchetti and Rocco Ciciretti “Probably, it is the largest crisis after great recession of 1930s that has affected both real and financial sectors (Llanto and Badiola, 2010). This crisis originated in United...
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...Stock Market Analysis: MANG 6221 Professor Dr. Marta Degl'Innocenti Assignment Length: 3,155 words (Excluding Endnote, Graph, Appendix and Reference) By Group Niagara Waterfall Thanat Pojkasemsin 25390422 Kanchana Leeratsatien 25088866 Leena Phaerakkakit 25712756 Synthia Manik 25665286 Jingwen Liu 25402323 Part A Introduction With the development of financial market, the technical analysis tools play an important role for the security evaluation. According to Penman (2010), investors estimate the stock future prices and trends by collecting and estimate the past prices and information. However, there are some conflict points on the momentum strategies performance, and it is a technical tool with multiple economy factors needs to be considered into. Why do momentum strategies exist? Refer to both behavioural and market-based argumentations. Momentum strategies are the stock analysis stool exists in the financial evaluation process, also in funds and currency investment. According to Chan, Jegadeesh, and Lakonishok J (1996) said, "it is a strategy that buying stocks in a high returns over the past three to twelve months, and selling those that had the poor returns over the same period." In the other words, the outperform stock will remain well...
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...www.capitalvia.com Global Research Limited IMPACT of GREECE White Paper - Impact of Greece Crisis Global Research Limited Introduction Historically, financial crisis tend to lead to sharp economic downturns, low government revenues, widening government deficits, high levels of debt, pushing many governments into defaults. This is called SOVEREGIN DEBT CRISIS. GREECE is currently facing this, it accumulated high levels of debt during the decade before the crisis, when capital markets were highly liquid. As the crisis has unfolded and there was liquidity crunch in world economy, Greece may no longer be able to rol over its maturing debt obligations. Build – Up To The Current Crisis Between 2001-2008, Greece reported budget deficits averaged 5% per year, compared to Eurozone average of 2%. Also, its current account deficits averaged to 9% per year compared to Eurozone average of 1% Greece funded these twin deficits by borrowing in international capital markets, leaving it with chronically high external debt (115% of GDP in 2009) Some of the facts which can be depicted from following charts : www.capitalvia.com 2 White Paper - Impact of Greece Crisis Global Research Limited How Country Debts And Budget Deficits Compare? Projected budget deficit for 2009 Budget deficit figs as % of GDP Debt as % of GDP UK 13% Greece 12.5% Spain 11.25% Ireland 54.3% 68.6% 112.6% 65.8% 10.75% 114.6% 5.3% Italy Germany 3.5% 74.3% Source:...
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...Impact of Global financial crisis On Pakistan By: Nauman Ayubi Butt Roll # 8511 Table of contents 1) Reason of choosing this topic 2) Introduction 3) The term ‘Financial Crises’ 4) Financial Crisis 2007-2009 5) Causes of the crisis 6) The crisis getting global 7) The Financial crisis and Pakistan: 8) Sectoral impact of the crisis in Pakistan: 9) External sector impact i) Exports ii) Imports 10) Financial Sector impact on i) Foreign exchange ii) Banking sector iii) Circular debt iv) Stock market: 11) Inflation 12) Economic business sector impact i) Impact on textile industry 13) Social Sector Impacts 14) Poverty and unemployment: 15) IMF 16) Technique to tackle the situation Reason for choosing this topic: The reason for choosing this topic is that it has a direct relationship with the poverty, unemployment, literacy, wealth distribution and also with the increased level of terrorism in Pakistan. Introduction: Capitalism is an economic system in which land labor production pricing and distribution are all determined by the market. There is a strong history of capitalism that it can shift from extended period of rapid growth to very short periods of contraction The global financial crisis in 2008-09 which are still on the go, they actually started from the 20th century and they have been increasing since then. In the end of 20th century the U.S housing prices after a multiyear started declining, the mortgage prices had been at...
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...in P.G. Dept. of Commerce K.L.S.D. College Ludhiana Global Recession and Impact on Various Sectors of Indian Economy ABSTRACT The word 'Recession' denotes a temporary period of economic decline during which trade and Individual activities are reduced. Till date, the world has witnessed a number of economic recessions that brought the trade market to a standstill and left the economists and analysts with valuable lessons to be learnt for future. Globalization and liberalization have contributed a lot in making the entire world a close knit economic unit. In an interconnected global economy recession and economic turbulence in one part of the world has the potential to disrupt the economies of other countries in a major way. The economic slowdown in US economy in 2008 caused by the burst of housing bubble engulfed the entire world in its grip. This research paper aims to give a detailed account of US Recession-2008 and its impact on Indian Economy. The financial crisis has not only affected United States of America, but also European Union, U.K and Asia. The Indian Economy too has felt the impact of the crisis to some extent. Though it is difficult to quantify the impact of the crisis on India, it is felt that certain sectors of the economy would be affected by the spill over effects of the financial crisis. INTRODUCTION The current global financial crisis is rooted in the subprime crisis which surfaced over a year ago in the United States of America. During the boom...
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...The U.S. Financial System and its Complexities Principles of Finance Week 4 Assignment 1 Professor Neilson Olin Frye 7/22/14 The effect of the US financial markets on the economy is considerably high. Part of the reasoning behind this is that all the major companies listed in the Stock Market directly contribute in the economic growth of the U.S. When the individual company performance decreases, their Stock Market rating starts to trend downward. This downward trend develops a negative impact on the U.S. economy. The Stock Market (whose dynamics have their own issues) doesn’t always produce an impact on the economy. In 2008, the U.S. went through a global financial crisis. The Stock Market crashed and negatively impacted the U.S. economy. These issues show the impact of US financial markets on economy (Chong & Miffre, 2009). The U.S. financial markets even have an impact on the companies and business. When the U.S. financial market is in a favorable position, there is a positive impact on the businesses and companies but is not always normal, some businesses flourish solely on their performance and not on their position in the Stock Market (Gai, 2007). When the overall performance of the U.S. financial markets is positive, the consumer that makeup the economy also has a greater self-confidence in regards to the overall health of our country. The consumers are not as hesitant to spend money on their needed items, and the banks are more willing to loan...
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...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 is IT in...
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...The Global Financial Crisis and Its Impacts on Developing Countries Student’s Name Professor’s Name Institution Dates Page no. 1.0 Origin of financial crisis………………………………………………………………… 3 2.0 causes of the financial crisis …………………………………………………………. 3-4 3.0 Channels of Transmitting Financial crisis ……………………………………………… 4 3.1 Transmission through financial flows ……………………………………….. 4-6 3.2 transmission through trade ……………………………………………………… 6 4.0 responses to the crisis by developing countries ………………………………………. 6 4.1 fiscal stimulation measures ………………………………………………….. 6-7 4.2 money policies ………………………………………………………………….. 7 5.0 reference ………………………………………………………………………………… 8 The Global Financial Crisis and Its Impacts on Developing Countries Origin of Financial Crisis The financial crisis originated form the United States’ economy. In the year 2007 during summer after two Bear Stearns Hedge Funds collapsed resulting to subprime mortgage crisis. This financial crisis reintroduced private defaults, bank failures, massive layoffs and credit crunch to the world. The financial crisis was as a result of too much foreign money from Asian countries like China flowing into the economy of US (Savona, Kirton, & Oldani, 2011). Causes of the Financial Crisis Creation of too much money by the banks had led to the crisis. New money is created when the banks give loans to the public. By giving loans, the banks created a large sums of money during the run up to the financial crisis. Many people had...
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...Introduction: The purpose of this report is to consider The Russian Crisis of 1998. What events led to this crisis, how it affected ordinary citizens and the effect it had on the world capital markets. We will also discuss the role IMF and other countries played in helping with the crisis. What the Russian government did in order to stabiles the situation and what role politics played in the process. We will use a number of sources in order to complete this report. Question One: What event is recognised as the beginning of the crisis? The Russian crisis begun on August 17th 1998 when the central bank of Russia announced that it would widen the intervention bands from ruble. It meant that the ruble was allowed to fluctuate against dollar. As a result, the exchange rate of the ruble fell steadily which led to a collapse in Russia economy. However, the crisis was not caused by a single event. It was a consequence of a continuing downward trend in Russia economy since its economic reform in 1991. The crisis’s seeds were sown from that day. The main causes of this crisis could be divided into 3 timelines: * Period 1991 – 1996: In 1991, Russia changed from a very strictly centralized economy to a market economy. Up until then, the Soviet played the most important role in subside all the state sectors. It consumed one-third of GDP and supported at least every third man, woman, and child (Roman, G & Robin, M – 1999). When the real prices were introduced, these state sectors...
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...Financial markets development and bank risk: Experience from Thailand during 1990–2012 1. Introduction a) Origion of concept: The longitudinal study aims to understand the impact of the evolution of financial markets development bank behavior. The focus on Thailand during the period 1990–2012 b) Theoritical background: captures the events surroundingthe Asian financial crisis of 1997–19982and the global financial crisis of 2007–2009. c) Significance/ Importance: Several studies have highlighted the benefits and costs of financial markets development. Essentially, financial markets development is thought to lead to economic growth by providing firms with better access to financing, thereby promoting domestic investments. Financial markets development (e.g., changes in bank regulations) can also affect the way in which banks operate and behave which, in turn, may have either positive or negative ramifications for the health of the banking system and the stability of thefinancial system. d) Research objective: This paper adds to the literature by analyzing the changes in financial markets development and the changes in capitalization ratios of commercial banks in Thailand over the period 1990–2012. e) Research question/ Problem statement: During this period, there were two major financial crises – the Asian financial crisis of 1997–1998 and the global financial crisis of 2007–2009 – both of which directly affected emerging market countries. While the former mainly...
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...www.capitalvia.com G lobal Research Limited I MPACT of G REECE White Paper - Impact of Greece Crisis Global Research Limited Introduction Historically, financial crisis tend to lead to sharp economic downturns, low government revenues, widening government deficits, high levels of debt, pushing many governments into defaults. This is called SOVEREGIN DEBT CRISIS. GREECE is currently facing this, it accumulated high levels of debt during the decade before the crisis, when capital markets were highly liquid. As the crisis has unfolded and there was liquidity crunch in world economy, Greece may no longer be able to rol over its maturing debt obligations. Build – Up To The Current Crisis Between 2001-2008, Greece reported budget deficits averaged 5% per year, compared to Eurozone average of 2%. Also, its current account deficits averaged to 9% per year compared to Eurozone average of 1% Greece funded these twin deficits by borrowing in international capital markets, leaving it with chronically high external debt (115% of GDP in 2009) Some of the facts which can be depicted from following charts : www.capitalvia.com 2 White Paper - Impact of Greece Crisis G lobal Research Limited How Country Debts And Budget Deficits Compare? Projected budget deficit for 2009 Budget deficit figs as % of GDP Debt as % of GDP 68.6% UK 13% 112.6% Greece 12.5% 54.3% Spain 11.25% 65.8% Ireland 10.75% 114.6% Italy ...
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...Kuperan Viswanathan SHORT PAPER #1 INTERDEPENDENCE OF WORLD FINANCIAL MARKETS AND FOREIGN EXCHANGE FLUCTUATIONS Submitted by: ZAHARIN BIN ALI MATRIC No. 95906 June 14, 2014 Short Paper #1 Page |2 1. INTRODUCTION With the increase in advancements in transportation and communications made possible by technology, the world has seen exponential growths in economic ties among all nations. In the last few decades, globalization has resulted in a rapid surge in the interchanging of goods and services reaching across further and faster 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...
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