Financial Crisis

By Hisham Al Rawashdeh
Under supervision of PhD Muna Al Muallah
Financial Management
Petra University
Jan 2016

Table of contents:-

• Definition
• Types of Financial crisis

• Financial Crisis Causes
• Theories
• Financial Crisis of 2008
• Implications of Financial Crisis of 2008 on the emerging market.
• Next Financial Crisis.
• References

Definition

The term financial crisis is applied broadly to a variety of situations in which some financial assets suddenly lose a large part of their nominal 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 crises include stock market crashes and the bursting of other financial bubbles, currency crises, and sovereign defaults. Financial crises directly result in a loss of paper wealth but do not necessarily result in changes in the real economy.

Financial crisis and Economic Crisis

•

Financial Crisis usually occurs in specific sectors, unlike the economic crisis which affect the entire economy.

•

If left unchecked, the financial crisis implications can lead to an economic crisis.

In early 2008, many felt that this financial crisis would be limited to the banking sector and the housing market.
However, the shortage of credit has had a very powerful impact on the real economy. Because banks are not lending, investment and consumption have fallen contributing to a serious economic recession. Led to fall in GDP /
Economic output which made a financial crisis into an economic crisis.

Types of Financial crisis

1- Banking crisis

•

A Bank run occurs when a large number of customers withdraw their deposits because they believe the bank is, or might become, insolvent.

•

As more people withdraw their deposits, the likelihood of default increases, and this encourages further withdrawals. This can destabilize the bank to the point where it faces bankruptcy as it cannot liquidate assets fast enough to cover its short-term liabilities.

The Bank crisis may include the following:
•

Bank runs: affect single banks

•

Banking panics: affect many banks

•

Systemic banking crises: A country experiences a large number of defaults and financial institutions face great difficulties repaying contracts. Examples of bank runs include the run on the Bank of the United States in
1931 and the run on Northern Rock in 2007. Banking crises generally occur after periods of risky lending and resulting loan defaults.

The role of The Federal Deposit Insurance Corporation (FDIC):
The Federal Deposit Insurance Corporation (FDIC) closed 465 failed banks from 2008 to 2012. In contrast, in the five years prior to 2008, only 10 banks failed. The FDIC is named as Receiver for a bank's assets when its capital levels are too low, or it cannot meet obligations the next day. After a bank's assets are placed into Receivership, the FDIC acts in two capacities—first, it pays

insurance to the depositors. Second, it assumes the task of selling and collecting the assets of the failed bank and settling its debts, including claims for deposits in excess of the insured limit.

2- Currency crisis
A situation in which the value of a currency becomes unstable or declining, making it difficult for the currency to be used as a reliable medium of exchange.
The effect of a currency crisis can be mitigated by sufficient foreign reserves.
Currency crises have large, measurable costs on an economy, but the ability to predict the timing and size of crises is limited by theoretical understanding of the complex interactions between macroeconomic fundamentals, investor expectations, and government policy.
IMF, the International Monetary Fund have adapted the classification of the
Models of the currency crisis into three generations as following:
1- First Generation: Paul Krugman argues that a sudden speculative attack on a fixed exchange rate, even though it appears to be an irrational change in expectations, can result from rational behavior by investors.
This happens if investors foresee that a government is running an excessive deficit, causing it to run short of liquid assets or "harder" foreign currency which it can sell to support its currency at the fixed rate. Investors are willing to continue holding the currency as long as they expect the exchange rate to remain fixed, but they flee the currency when they anticipate that it may decline. 2- Second Generation:
In these models, doubts about whether the government is willing to maintain its exchange rate peg, lead to multiple equilibria, suggesting that self fulfilling prophecies may be possible, in which the reason investors attack the currency is that they expect other investors to attack the currency.
3- Third Generation:
Its models have explored how problems in the banking and financial system interact with currency crises, and how crises can have real effects on the rest of the economy.

-Chang and Velasco argue that a currency crisis may cause a banking crisis if local banks have debts denominated in foreign currency.
- Burnside, Eichenbaum, and Rebelo argue that a government guarantee of the banking system may give banks an incentive to take on foreign debt, making both the currency and the banking system vulnerable to attack.

3- International financial crises or Sudden Stops.

-As the 3rd generation of currency crisis model that it also focus on balance sheet mismatches, give greater weight to the international factors like
(changes in international interest rates or spreads on risky assets) in causing
“sudden stops” in capital flows.
-When a country fails to pay back its sovereign debts which called a sovereign default, While devaluation and default could both be voluntary decisions of the government, they are often perceived to be the involuntary results of a change in investor sentiment that leads to a sudden stop in capital inflows or a sudden increase in capital flight. Or in another words, its affect the investor tendency that lead to a sudden stops in capital inflows which defined as a sudden slowdown in private capital inflows into emerging market economies
Several currencies that formed part of the European Exchange Rate
Mechanism suffered crises in 1992–93 and were forced to devalue or withdraw from the mechanism. Another round of currency crises took place in Asia in 1997–98. Many Latin American countries defaulted on their debt in the early 1980s. The 1998 Russian financial crisis resulted in a devaluation of the ruble and default on Russian government bonds.

4- Speculative bubbles and crashes

A speculative bubble exists in the event of large, sustained overpricing of some class of assets. One factor that frequently contributes to a bubble is the presence of buyers who purchase an asset based solely on the expectation that they can later resell it at a higher price, rather than calculating the income it will generate in the future. If there is a bubble, there is also a risk of a crash in

asset prices: market participants will go on buying only as long as they expect others to buy, and when many decide to sell the price will fall. However, it is difficult to predict whether an asset's price actually equals its fundamental value, so it is hard to detect bubbles reliably. Some economists insist that bubbles never or almost never occur.

Well-known examples of bubbles (or purported bubbles) and crashes in stock prices and other asset prices include the Dutch tulip mania, the Wall Street
Crash of 1929, the Japanese property bubble of the 1980s, the crash of the dot-com bubble in 2000–2001, and the now-deflating United States housing bubble. The 2000s sparked a real estate bubble where housing prices were increasing significantly as an asset good.

5- Wider economic crisis
Negative GDP growth lasting two or more quarters is called a recession. An especially prolonged or severe recession may be called a depression, while a long period of slow but not necessarily negative growth is sometimes called economic stagnation.

Some economists argue that many recessions have been caused in large part by financial crises. One important example is the Great Depression, which was preceded in many countries by bank runs and stock market crashes.
The subprime mortgage crisis and the bursting of other real estate bubbles around the world also led to recession in the U.S. and a number of other countries in late 2008 and 2009.
Some economists argue that financial crises are caused by recessions instead of the other way around, and that even where a financial crisis is the initial shock that sets off a recession, other factors may be more important in prolonging the recession. In particular, Milton Friedman and Anna
Schwartz argued that the initial economic decline associated with the crash of
1929 and the bank panics of the 1930s would not have turned into a prolonged depression if it had not been reinforced by monetary policy mistakes on the part of the Federal Reserve, a position supported by Ben Bernanke.

Financial Crisis Causes

Causes of financial crisis vary with the type of crisis. Many economists have come up with causes of financial crisis, but there is hardly a consensus between them on these causes. That because of the different perspective of economists and that every financial crisis has its own circumstances.

1- Strategic complementarities in financial markets

It is often observed that successful investment requires each investor in a financial market to guess what other investors will do. George Soros has called this need to guess the intentions of others 'reflexivity'. Similarly, John
Maynard Keynes compared financial markets to a beauty contest game in which each participant tries to predict which model other participants will consider most beautiful. Circularity and self-fulfilling prophecies may be exaggerated when reliable information is not available because of opaque disclosures or a lack of disclosure.
Furthermore, in many cases investors have incentives to coordinate their choices. For example, someone who thinks other investors want to buy lots of Japanese yen may expect the yen to rise in value, and therefore has an incentive to buy yen too. Likewise, a depositor in IndyMac Bank who expects other depositors to withdraw their funds may expect the bank to fail, and therefore has an incentive to withdraw too. Economists call an incentive to mimic the strategies of others strategic complementarity.
It has been argued that if people or firms have a sufficiently strong incentive to do the same thing they expect others to do, then self-fulfilling prophecies may occur. For example, if investors expect the value of the yen to rise, this may cause its value to rise; if depositors expect a bank to fail this may cause it to fail. Therefore, financial crises are sometimes viewed as a vicious

circle in which investors shun some institution or asset because they expect others to do so.

2- Leverage

Leverage, which means borrowing to finance investments, is frequently cited as a contributor to financial crises. When a financial institution (or an individual) only invests its own money, it can, in the very worst case, lose its own money. But when it borrows in order to invest more, it can potentially earn more from its investment, but it can also lose more than all it has.
Therefore, leverage magnifies the potential returns from investment, but also creates a risk of bankruptcy. Since bankruptcy means that a firm fails to honor all its promised payments to other firms, it may spread financial troubles from one firm to another.
The average degree of leverage in the economy often rises prior to a financial crisis. For example, borrowing to finance investment in the stock market ("margin buying") became increasingly common prior to the Wall
Street Crash of 1929. In addition, some scholars have argued that financial institutions can contribute to fragility by hiding leverage, and thereby contributing to underpricing of risk.

3- Asset-liability mismatch

Another factor believed to contribute to financial crises is asset-liability mismatch, a situation in which the risks associated with an institution's debts and assets are not appropriately aligned. For example, commercial banks offer deposit accounts which can be withdrawn at any time and they use the proceeds to make long-term loans to businesses and homeowners. The mismatch between the banks' short-term liabilities (its deposits) and its longterm assets (its loans) is seen as one of the reasons bank runs occur (when depositors panic and decide to withdraw their funds more quickly than the bank can get back the proceeds of its loans). Likewise, Bear Stearns failed in

2007–08 because it was unable to renew the short-term debt it used to finance long-term investments in mortgage securities.
In an international context, many emerging market governments are unable to sell bonds denominated in their own currencies, and therefore sell bonds denominated in US dollars instead. This generates a mismatch between the currency denomination of their liabilities (their bonds) and their assets (their local tax revenues), so that they run a risk of sovereign default due to fluctuations in exchange rates.

4- Uncertainty and herd behavior

Many analyses of financial crises emphasize the role of investment mistakes caused by lack of knowledge or the imperfections of human reasoning. Behavioral finance studies errors in economic and quantitative reasoning. Psychologist Torbjorn K A Eliazon has also analyzed failures of economic reasoning in his concept of 'œcopathy'.
Historians, notably Charles P. Kindleberger, have pointed out that crises often follow soon after major financial or technical innovations that present investors with new types of financial opportunities, which he called
"displacements" of investors' expectations.
Early examples include the South Sea Bubble and Mississippi Bubble of 1720, which occurred when the notion of investment in shares of company stock was itself new and unfamiliar, and the Crash of 1929, which followed the introduction of new electrical and transportation technologies. More recently, many financial crises followed changes in the investment environment brought about by financial deregulation, and the crash of the dot com bubble in 2001 arguably began with "irrational exuberance" about Internet technology. Unfamiliarity with recent technical and financial innovations may help explain how investors sometimes grossly overestimate asset values. Also, if the first investors in a new class of assets (for example, stock in "dot com" companies) profit from rising asset values as other investors learn about the innovation (in our example, as others learn about the potential of the
Internet), then still more others may follow their example, driving the price even higher as they rush to buy in hopes of similar profits.
If such "herd behavior" causes prices to spiral up far above the true value of the assets, a crash may become inevitable. If for any reason the price briefly

falls, so that investors realize that further gains are not assured, then the spiral may go into reverse, with price decreases causing a rush of sales, reinforcing the decrease in prices.

5- Regulatory failures

Governments have attempted to eliminate or mitigate financial crises by regulating the financial sector. One major goal of regulation is transparency: making institutions' financial situations publicly known by requiring regular reporting under standardized accounting procedures. Another goal of regulation is making sure institutions have sufficient assets to meet their contractual obligations, through reserve requirements, capital requirements, and other limits on leverage.
Some financial crises have been blamed on insufficient regulation, and have led to changes in regulation in order to avoid a repeat. For example, the former Managing Director of the International Monetary Fund, Dominique
Strauss-Kahn, has blamed the financial crisis of 2008 on 'regulatory failure to guard against excessive risk-taking in the financial system, especially in the
US'. Likewise, the New York Times singled out the deregulation of credit default swaps as a cause of the crisis.
However, excessive regulation has also been cited as a possible cause of financial crises. In particular, the Basel II Accord has been criticized for requiring banks to increase their capital when risks rise, which might cause them to decrease lending precisely when capital is scarce, potentially aggravating a financial crisis.
International regulatory convergence has been interpreted in terms of regulatory herding, deepening market herding (discussed above) and so increasing systemic risk. From this perspective, maintaining diverse regulatory regimes would be a safeguard.
Fraud has played a role in the collapse of some financial institutions, when companies have attracted depositors with misleading claims about their investment strategies, or have embezzled the resulting income. Examples include Charles Ponzi's scam in early 20th century Boston, the collapse of the MMM investment fund in Russia in 1994, the scams that led to the Albanian Lottery Uprising of 1997, and the collapse of Madoff Investment
Securities in 2008.

Many rogue traders that have caused large losses at financial institutions have been accused of acting fraudulently in order to hide their trades. Fraud in mortgage financing has also been cited as one possible cause of the
2008 subprime mortgage crisis; government officials stated on September 23,
2008 that the FBI was looking into possible fraud by mortgage financing companies Fannie Mae and Freddie Mac, Lehman Brothers, and insurer American International Group. Likewise it has been argued that many financial companies failed in the recent crisis because their managers failed to carry out their fiduciary duties.

6- Contagion

Contagion refers to the idea that financial crises may spread from one institution to another, as when a bank run spreads from a few banks to many others, or from one country to another, as when currency crises, sovereign defaults, or stock market crashes spread across countries. When the failure of one particular financial institution threatens the stability of many other institutions, this is called systemic risk.
One widely cited example of contagion was the spread of the Thai crisis in
1997 to other countries like South Korea. However, economists often debate whether observing crises in many countries around the same time is truly caused by contagion from one market to another, or whether it is instead caused by similar underlying problems that would have affected each country individually even in the absence of international linkages.

7- Recessionary effects

Some financial crises have little effect outside of the financial sector, like the Wall Street crash of 1987, but other crises are believed to have played a role in decreasing growth in the rest of the economy. There are many theories why a financial crisis could have a recessionary effect on the rest of the economy. These theoretical ideas include the 'financial accelerator', 'flight to quality' and 'flight to liquidity', and the Kiyotaki-Moore model. Some 'third

generation' models of currency crises explore how currency crises and banking crises together can cause recessions.

Theories
Marxist theories

Recurrent major depressions in the world economy at the pace of 20 and 50 years (often referred to as the business cycle) have been the subject of studies since Jean Charles Léonard de Sismondi (1773–1842) provided the first theory of crisis in a critique of classical political economy's assumption of equilibrium between supply and demand. Developing an economic crisis theory became the central recurring concept throughout Karl Marx's mature work. Marx's law of the tendency for the rate of profit to fall borrowed many features of the presentation of John Stuart Mill's discussion Of the Tendency of Profits to a
Minimum (Principles of Political Economy Book IV Chapter IV). The theory is a corollary of the Tendency towards the Centralization of Profits.
In a capitalist system, successfully-operating businesses return less money to their workers (in the form of wages) than the value of the goods produced by those workers (i.e. the amount of money the products are sold for).
This profit first goes towards covering the initial investment in the business.
In the long-run, however, when one considers the combined economic activity of all successfully-operating business, it is clear that less money (in the form of wages) is being returned to the mass of the population (the workers) than is available to them to buy all of these goods being produced. Furthermore, the expansion of businesses in the process of competing for markets leads to an abundance of goods and a general fall in their prices, further exacerbating the tendency for the rate of profit to fall.
The viability of this theory depends upon two main factors: firstly, the degree to which profit is taxed by government and returned to the mass of people in the form of welfare, family benefits and health and education spending; and secondly, the proportion of the population who are workers rather than investors/business owners. Given the extraordinary capital expenditure required to enter modern economic sectors like airline transport, the military

industry, or chemical production, these sectors are extremely difficult for new businesses to enter and are being concentrated in fewer and fewer hands.
Empirical and econometric researches continue especially in the world systems theory and in the debate about Nikolai Kondratiev and the so-called
50-years Kondratiev waves. Major figures of world systems theory, like Andre
Gunder Frank and Immanuel Wallerstein, consistently warned about the crash that the world economy is now facing. World systems scholars and
Kondratiev cycle researchers always implied that Washington
Consensus oriented economists never understood the dangers and perils, which leading industrial nations will be facing and are now facing at the end of the long economic cycle which began after the oil crisis of 1973.

Herding models and learning models

A variety of models have been developed in which asset values may spiral excessively up or down as investors learn from each other. In these models, asset purchases by a few agents encourage others to buy too, not because the true value of the asset increases when many buy (which is called "strategic complementarity"), but because investors come to believe the true asset value is high when they observe others buying.
In "herding" models, it is assumed that investors are fully rational, but only have partial information about the economy. In these models, when a few investors buy some type of asset, this reveals that they have some positive information about that asset, which increases the rational incentive of others to buy the asset too. Even though this is a fully rational decision, it may sometimes lead to mistakenly high asset values (implying, eventually, a crash) since the first investors may, by chance, have been mistaken. Herding models, based on Complexity Science, indicate that it is the internal structure of the market, not external influences, which is primarily responsible for crashes.
In "adaptive learning" or "adaptive expectations" models, investors are assumed to be imperfectly rational, basing their reasoning only on recent experience. In such models, if the price of a given asset rises for some period of time, investors may begin to believe that its price always rises, which increases their tendency to buy and thus drives the price up further. Likewise, observing a few price decreases may give rise to a downward price spiral, so in models of this type large fluctuations in asset prices may occur. Agent-based

models of financial markets often assume investors act on the basis of adaptive learning or adaptive expectations.

Coordination games

Mathematical approaches to modeling financial crises have emphasized that there is often positive feedback between market participants' decisions
(see strategic complementarity). Positive feedback implies that there may be dramatic changes in asset values in response to small changes in economic fundamentals. For example, some models of currency crises (including that of Paul Krugman) imply that a fixed exchange rate may be stable for a long period of time, but will collapse suddenly in an avalanche of currency sales in response to a sufficient deterioration of government finances or underlying economic conditions.
According to some theories, positive feedback implies that the economy can have more than one equilibrium. There may be an equilibrium in which market participants invest heavily in asset markets because they expect assets to be valuable, but there may be another equilibrium where participants flee asset markets because they expect others to flee too. This is the type of argument underlying Diamond and Dybvig's model of bank runs, in which savers withdraw their assets from the bank because they expect others to withdraw too. Likewise, in Obstfeld's model of currency crises, when economic conditions are neither too bad nor too good, there are two possible outcomes: speculators may or may not decide to attack the currency depending on what they expect other speculators to do.

Financial Crisis of 2008
The financial crisis happened because banks were able to create too much money, too quickly, and used it to push up house prices and speculate on financial markets.
U.S economy in 2001 had experienced recession because of the “dot com bubble” beside the terrorist attacks on the WTO. The Federal Reserve lowered its fund rate 11 times in order to create the liquidity needed to keep the recession away. From 6.5 % in May 2000 To 1% in June 2003
All of above created an environment of easy credit and continuous growth of home prices, which made the subprime mortgage looks like a new rush for gold. For bankers it was not enough, so to utilize the circumstances they have repackaged the loans into CDOs “Collateralized Debt Obligations” and pass on the debt to the new secondary market established for originating and distributing subprime mortgage loans.

Banks created too much money… and used this money to push up house prices and speculate on financial markets.

Every time a bank makes a loan, new money is created. In the run up to the financial crisis, banks created huge sums of new money by making loans. In just 7 years, they doubled the amount of money and debt in the economy.

By 2004, U.S. home ownership had peaked at 70%, and the point of saturation have been reached. Which led to a 40% decline in the U.S home construction index during 2006.
In the beginning of 2007, 25 subprime lenders were filing for bankruptcy. The problems spread beyond the United States borders.
•

Some well-known banks around the world had to approach other banks for emergency funding due to a liquidity problem.

•

Central banks and governments around the world had started coming together to prevent further financial catastrophe.

The Fed started slashing the discount rate as well as the funds rate to 1% and
1.75%, but bad news continued to pour in from all sides. Well-known banks filed for bankruptcy, like Lehman Brothers.
The U.S. government then came out with National Economic Stabilization Act of 2008, which created a corpus of $700 billion to purchase distressed assets, especially mortgage-backed securities. Different governments came out with their own versions of bailout packages.

Implications of Financial Crisis of 2008 on the emerging market in numbers
•

Developing economies have experienced restricted access to external finance. Private Flows
(Billion of US$)

LAC
Emerging Europe
Africa and Middle East
Emerging Asia

2007
183.6
392.8
37.4
314.8

2008
89.0
254.2
26.4
96.2

2009
43.1
30.2
27.2
64.9

Source: Institute of International Finance, January 2009

•

Reduction in exports of goods and services

Exports real value
(Growth rate)

LAC
Emerging Europe
Africa
Middle East
Emerging Asia
Source: WTO

2006
4.0
6.0
1.5
3.0
13.5

2007
3.0
7.5
4.5
4.0
11.5

2008
1.5
6.0
3.0
3.0
4.5

•

The dynamic of GDP have been significantly affected

GDP
(Growth rate)

LAC
Emerging Europe
Emerging Asia

2008
3.9
4.2
3.9

2009
-2.2
-2.6
0.2

2010
3.0
1.3
5.0

Source: JP Morgan

Next Financial Crisis.

The next financial crisis is coming, it’s a just a matter of time – and we haven’t finished fixing the flaws in the global system that were so brutally exposed by the last one.
That is the message from the International Monetary Fund’s latest Global
Financial Stability report, which will make sobering reading for the finance ministers and central bankers gathered in Lima, Peru, for its annual meeting.
Massive monetary policy stimulus has rekindled growth in developed economies since the deep recession that followed the collapse of Lehman
Brothers in 2008; but what the IMF calls the “handover” to a more

sustainable recovery – without the extra prop of ultra-low borrowing costs – has so far failed to materialize.
Meanwhile, the cheap money created to rescue the developed economies has flooded out into emerging markets, inflating asset bubbles, and encouraging companies and governments to take advantage of unusually low borrowing costs and load up on debt.
“Balance sheets have become stretched thinner in many emerging market companies and banks. These firms have become more susceptible to financial stress,” the IMF says.
Meanwhile, the failure to patch up the international financial system after the last crash, by ensuring that banks in emerging markets hold enough capital, and constraining risky borrowing, for example, means that a new Lehman
Brothers-type shock could spark another global panic.
“Shocks may originate in advanced or emerging markets and, combined with unaddressed system vulnerabilities, could lead to a global asset market disruption and a sudden drying up of market liquidity in many asset classes,” the IMF says, warning that some markets appear to be “brittle”.
So as the US Federal Reserve lays the groundwork for a return to peacetime interest rates, from the emergency levels of the past seven years, financial markets face what the IMF calls an “unprecedented adjustment”; and the world looks woefully underprepared.
The IMF’s warning echoes a chorus of others. The Bank of England’s chief economist, Andy Haldane, has argued that the world is entering the latest episode of a “three-part crisis trilogy”.Unctad, the UN’s trade and development arm, would like to see advanced economies boost public spending to offset the downturn in emerging economies. The Bank for
International Settlements believes interest rates have been too low for too long, encouraging too much risk-taking in financial markets. All of them fear that the global financial system is primed for a crisis.
The IMF has not given up hope of what it calls a “successful normalization” – it lays out a series of conditions that would need to be met, from a successful rebalancing of growth in China, to “safeguarding against market illiquidity” in financial markets.

Yet the failure of the world’s policymakers to get to grips with the shortcomings of the international financial system over the past seven years, despite the long shadow cast by Lehman and its aftermath, suggests that any measures enacted now are likely to be too little, too late. The message many may take home from Lima is, “batten down the hatches”.
A huge number of scenarios and predictions on where and how the next financial crisis coming, some economists expecting a currency crisis in the emerging countries like Brazil and some of Asian countries calling back the
Asian flu in 1997.
But conditions are much more dangerous today than back then. Virtually the whole world is on recession, the West and Russia are back in Cold War mode, the Middle East is engaged in actual war, and the world is more interconnected than ever—potentially making the transmission of financial diseases much quicker.

References

1- Hyman P. Minsky (1986, 2008), Stabilizing an Unstable Economy.
2- Ferguson, Niall (2009). The Ascent of Money: A Financial History of the World.
Penguin. p. 448.
3- Charles P. Kindleberger and Robert Aliber (2005), Manias, Panics, and Crashes:
A History of Financial Crises (Palgrave Macmillan, 2005).
4- Franklin Allen and Douglas Gale (2007), Understanding Financial Crises.
5- R. Glenn Hubbard, ed., (1991) Financial Markets and Financial Crises.
6- Luc Laeven and Fabian Valencia (2008), 'Systemic banking crises: a new database'. International Monetary Fund Working Paper 08/224.
7- raig Burnside, Martin Eichenbaum, and Sergio Rebelo (2008), 'Currency crisis models', New Palgrave Dictionary of Economics, 2nd ed.
8- Tyler Durden, The Table Is Set For The Next Financial Crisis article
9- The International Monetary Fund’s managing director; Christine Lagarde speaks about the world financial situation on October 2015.