...EUROZONE CRISIS ABSTRACT Euro crisis was not fortunate. It was something that could be avoided if proper care was taken. The European sovereign debt crisis has emerged out of a situation that has made it difficult or impossible for some countries in the euro area to re-finance their government debt without the assistance of third party. It was not only the government sector that lead to this crisis but major cause of it was the private sectors taking up too much of loans. The report also states the impact of euro zone crisis on the world and the India. The Eurozone crisis is systemic in nature. It is a result of policy failures in the way European Monetary Union (EMU) was designed, constructed and implemented. In particular, the crisis is a consequence of the failure to put in place certain necessary institutional components. INTRODUCTION The global economy has experienced slow growth since the U.S. financial crisis of 2008-2009, which has exposed the unsustainable fiscal policies of countries in Europe and around the globe. Greece, which spent heartily for years and failed to undertake fiscal reforms, was one of the first to feel the pinch of weaker growth. When growth slows, so do tax revenues – making high budget deficits unsustainable. The result was that the new Prime Minister George Papandreou, in late 2009, was forced to announce that previous governments had failed to reveal the size of the nation’s deficits. In truth, Greece’s debts were so large that they actually...
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...Preliminary Draft February 20, 2010 THE GLOBAL ECONOMIC CRISIS AND SOUTH ASIA By Dr. Akmal Hussain, Distinguished Professor, Beaconhouse National University INTRODUCTION What began as a financial crisis in 2008 rapidly metastasized into a global economic crisis that pushed the world economy into the deepest recession since the Great Depression of the 1930s. In this paper we will examine the origins and nature of this crisis in the context of the dynamics of world capitalism, indicate the policy challenges in the process of recovery and analyze its impact on South Asia. I. STRUCTURAL CHANGE AND FRAGILITY OF THE FINANCIAL SPHERE In the process of its growth the world economy has undergone a structural change in the post war period in terms of two important features: (i) The dominant form of the production unit of goods and services that emerged in the post war period was the large multinational corporation (MNC) in contrast to the large national corporation in the late 19th century and the small firm in the late 18th century.1 The MNCs were not only able to sell goods and services on a global scale but were able to achieve internationalization in their production processes, such that different components of a particular good could be manufactured in their facilities in different countries to take advantage of country specific resource 1 For a more detailed analysis of Growth and Structural Change in the Global Economy since the Industrial Revolution...
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...Rangaswamy A crisis so severe, the Indian financial system is affected. ABSTRACT The global financial crisis, brewing for a while, really started to show its effects in the middle of 2007 and into 2008. Around the world stock markets have fallen, large financial institutions have collapsed or been bought out, and governments in even the wealthiest nations have had to come up with rescue packages to bail out their financial systems. On the one hand many people are concerned that those responsible for the financial problems are the ones being bailed out, while on the other hand, a global financial meltdown will affect the livelihoods of almost everyone in an increasingly inter-connected world. The problem could have been avoided, if ideologues supporting the current economics models weren’t so vocal, influential and inconsiderate of others’ viewpoints and concerns. Following a period of economic boom, a financial bubble—global in scope—has now burst. A collapse of the US sub-prime mortgage market and the reversal of the housing boom in other industrialized economies have had a ripple effect around the world. Furthermore, other weaknesses in the global financial system have surfaced. Some financial products and instruments have become so complex and twisted, that as things start to unravel, trust in the whole system started to fail. This study is focus on financial /economic crisis and its effect on the Indian economy and government policies and Indian financial service...
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...Discussion Paper No. 2009/01 The Financial Crisis of 2008 and the Developing Countries Wim Naudé* January 2009 Abstract Following the financial crisis that broke in the US and other Western economies in late 2008, there is now serious concern about its impact on the developing countries. The world media almost daily reports scenarios of gloom and doom, with many predicting a deep global recession. This paper critically discusses this and concludes that as far as the developing countries are concerned, a bit more optimism may be warranted. Although without doubt there are particular countries that will be adversely affected, there will also be countries that may be less affected, may avoid recession, and may recover sooner than expected. Six major reasons for this conclusion are discussed. Without this resilience in the developing world, prospects for the world’s richer countries would be much bleaker. Finally, some options available to the developing countries for minimizing the impact of the crisis are discussed. The crisis accentuates the urgent need for accelerating financial development in developing countries, both through domestic financial deepening, domestic resource mobilization, and reform of the international financial system. Keywords: financial crisis, developing countries, development finance, financial development JEL classification: F34, F35, G14, O16 Copyright © UNU-WIDER 2009 * UNU-WIDER, Helsinki, Finland, email: wim@wider.unu.edu This study has been prepared...
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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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...India too has been impacted by the crisis – and by much more than it was suspected earlier. The four major questions that have been raised are: * Why has India been hit by the crisis? * How has India been hit by the crisis? * How have we responded to the challenge? * What is the outlook for India? Why Has India Been Hit By the Crisis? There is, at least in some quarters, dismay that India has been hit by the crisis. This dismay stems from two arguments. The first argument goes as follows. The Indian banking system has had no direct exposure to the sub-prime mortgage assets or to the failed institutions. It has very limited off-balance sheet activities or securitized assets. In fact, our banks continue to remain safe and healthy. So, the enigma is how can India be caught up in a crisis when it has nothing much to do with any of the maladies that are at the core of the crisis. The second reason for dismay is that India's recent growth has been driven predominantly by domestic consumption and domestic investment. External demand, as measured by merchandize exports, accounts for less than 15 per cent of our GDP. The question then is, even if there is a global downturn, why should India be affected when its dependence on external demand is so limited? The answer to both the above frequently-asked questions lies in globalization. First, India's integration into the world economy over the last decade has been remarkably rapid. Integration into the world implies...
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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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...R e se a rc h a n d Stat i s t i c s B r a n c h working paper 16/2009 Impact of the Global Economic and Financial Crisis over the Automotive Industry in Developing Countries UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION RESEARCH AND STATISTICS BRANCH WORKING PAPER 16/2009 Impact of the Global Economic and Financial Crisis over the Automotive Industry in Developing Countries Peter Wad Copenhagen Business School UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION Vienna, 2010 This paper was prepared by Peter Wad, UNIDO consultant and backstopped by Nobuya Haraguchi, UNIDO staff member, Research and Statistics Branch, Programme Coordination and Field Operations Division. Iguaraya Saavedra provided administrative support. The designations employed, descriptions and classifications of countries, and the presentation of the material in this report do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations Industrial Development Organization (UNIDO) concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries, or its economic system or degree of development. The views expressed in this paper do not necessarily reflect the views of the Secretariat of the UNIDO. The responsibility for opinions expressed rests solely with the authors, and publication does not constitute an endorsement by UNIDO. Although great care has...
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...TABLE OF CONTENTS Introduction 2 Global Impacts of the Credit Crunch 3 IBM – International Business Machines 4 Table 1: IBM’s Financial Performance History 2000-2009. Source: IBM Annual Report 2009 5 Table 2: Earnings per share 2006 to 2010 projection. Source: IBM Annual Report 2009. 6 How the Credit Crunch Impacted IBM’s Operations 7 Global Integration 7 Changing Business Scope 7 Revenue 8 Human Resource Management Impacts 8 Price Instability 8 Exchange Rate Fluctuation 8 Interest Rate Fluctuations 8 Debt 9 Notable Impacts 9 IBM’s Operational Strategy 10 Strategic Response 10 HRM Strategy 10 Value Chain Strategy – Developing a Business of Values 11 Table 3: IBM Value Chain. Source – ibm.com/services 12 International Strategy 13 Institutional Strategy 13 Recommendations for Future Growth 14 Delivering Value to Customers 14 Human Resource Capital 15 Research and Development 16 References 17 Bibliography 18 Introduction The ‘Credit Crunch’ emerged in 2007 with the first effects being felt by the U.S. Mortgage industry. The term ‘credit crunch’ came was used to describe the collapse of the subprime mortgage industry that resulted in a freeze in lending by financial institutions. With non-payment of loans, huge debt and no capital gains, financial institutions began to go under. Investment banks, financial services and real estate market felt immediate impacts. Trillions of U.S. dollars were lost, huge government bailouts...
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...In modern world, financial crisis at world level can be traced back to 1920’s, when economic depression of 1929 occurred. It is said that history repeats itself. Today’s world financial crisis which started with mortgage crisis is only one aspect of history. Crisis began with sub-prime lending crisis and whole financial system was engulfed. Sub-prime crisis refers to the crisis faced by the mortgage companies that were in loaning business that due to adverse situations ran in trouble. As a result the number of defaulters increased resulting in huge bad debts for the mortgagee companies. Several of world’s best managed financial institutions went bankrupt and rests are dying for bail out. The world demand cycle is heading south and its impact is visible in world petroleum prices and auto manufacturer’s recent outcry for bailout. The liquidity is engulfing the whole world and taking the shape of financial famine. In the period of strong global growth growing capital flow and prolonged stability market participant sought higher output without an adequate calculation of the risks and failed to exercise proper due diligence. Weak underwriting standards, unsound risk management practices increasingly complex and opaque financial products and consequent excessive leverage combined to create vulnerabilities in the system. At the same time what looked as brisk-effervescence is financial market ended up in becoming alarm ringer for a greater catastrophe in the coming years....
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...FINANIAL CRISIS 2008 AND CORPORATE GOVERNANCE The business world is questioning whether Corporate Governance has become a mere catchphrase, divorced from the contentious problems it is supposed to solve… MEMBERS: AYUSH KUMAR-030 NIPEKSH I MAHAJAN-082 PRABHAV MISHRA-0 PRATEEK KUMAR-096 VAIBHAV JAIN-164 “Why should a financial engineer be paid four, four times... to a hundred times more than the real engineer? A real engineer build bridges, a financial engineer build, build dreams. And when those dream turn out to be nightmares, other people pay for it.” - Andrew Sheng “Contrary to the vulgar belief that men are motivated primarily by materialistic considerations, we now see the capitalist system being discredited and destroyed all over the world, even though the system has given men the greatest material comforts” - Ayn Rand “In fact, there is ultimately a limit to how much regulation can do. In the final analysis, you could write all the rules you want, but there has to be a philosophy of ethical behaviour that comes from human beings operating in a professional way” – William H. Donaldson, CFA “The global crisis was caused by “the over-50s not knowing what the under-30’s were doing” – Johann Rupert, Remgro Chairman “The first casualty of a downturn is truth” - Financial Times Columnist 30 Sept 2008 Introduction- The banking crisis was triggered by largely unregulated trading of complex financial instruments, including mortgaged-backed...
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...Term Project ON Euro Crisis: Origin, consequences and impact on world and Indian economy Submitted By: Ajay Sharma 2011SMF6623 Nitesh Goyal 2011SMF66 Sajal Agarwal 2011SMF66 Contents Description | Page No. | | | | | | | | | | | | | | | | | | | | | | | Impact on India | | Impact of FDI in India | | Snapshot of impact on India | | Conclusion | | References | | Impact on India Though India is primarily a domestic economy, India’s exports are positively linked to the global economic growth. This is likely to adversely impact India’s export growth in the coming months. However, growth will be only marginally affected by the slowdown in the euro region debt stricken countries as our exposure is low. Software services and other export oriented sectors would benefit from the rupee depreciation. FDI has not been significantly affected by the crisis while the FIIs are showing outflow in the last couple of months. International commodity price moderation is not being translated in domestic prices. Inflationary Concerns: Further, exchange rate depreciation would worsen the inflationary conditions in the economy. Therefore, the RBI would have to continue with its anti-inflationary stance in the near term if domestic conditions do not improve Source: World Bank, Ministry of Commerce, Government of India Interpretation of Graph - Graph 1 show that the share of the euro zone exports...
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...A STUDY OF FINANCIAL CRISIS AND ITS IMPACT ON STOCK MARKET A MANAGEMENT RESEARCH PROJECT SUBMITTED TO DHARMSINH DESAI UNIVERSITY FOR THE PARTIAL FULFILLMENT OF FOR THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION (MBA) SUBMITTED BY CHARMI S. SHAH ROLL NO.: 42 UNDER THE GUIDANCE OF Dr. FALGUNI PANDYA ASSISTANT PROFESSOR (FINANCE) CENTRE FOR MANAGEMENT STUDIES DHARMSINH DESAI UNIVERSITY NADIAD 2014 DECLARATION I hereby declare that the project titled “FINANCIAL CRISIS AND ITS IMPACT ON THE STOCK MARKET” is my own work and I have not copied it from somewhere else. The project report is prepared just as a part of partial fulfillment of MBA programme and no other use of this project will be done. MANAGEMENT RESEARCH PROJECT is a part of syllabus in MBA programme of CMS – DDU , Nadiad, Gujarat. Name : Charmi S. Shah Signature : Date : 21st February, 2014 CENTRE FOR MANAGEMENT STUDIES DHARMSINH DESAI UNIVERSITY CERTIFICATE This is to certify that the Management Research Project has been Carried Out under the theme “FINANCIAL CRISIS AND ITS IMPACT ON STOCK MARKET”. This report is the bonafide work of Ms. Charmi Shah Roll Number 1542 of MBA Semester IV during the academic year 2012-14. Faculty Guide: Prof. Falguni Pandya Date: 21/02/2014 Head of Department: Dr. Naresh Patel Date:21/02/2014 Preface Practical knowledge by way of research is a step to bride up the gap between the theoretical studies of finance and its practicality in the world. Hence D...
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...Impact of Housing Market Crash “The Impact of housing Market Crash on Global Economy” The housing market in the United States became a nightmare for many people who had taken out loans found and they were not able to pay their mortgage repayments. When the value of homes decreased, the borrowers realized themselves with negative capital. The negative movement of housing sector did effect the United States economy. Individual house owners and investors could not react to the situation and their properties lost value. Rates of mortgages increased extremely high that’s why mortgages no longer became affordable for many people, and thousands of mortgages defaulted. Many banks and investment organizations start have difficult time finding money due to massive losses in mortgage. This also caused slow down the housing market, growth of new home building and putting many people in unemployment environment. Depressed housing prices made many homes worth much less than the mortgage value therefore some owners chose just walk away instead of pay their mortgage. The housing sector is one of the most important chains in the economy. After the housing market crash, the economy could not run as usual because this chain had a big impact in the United States economy. Therefore the other fields and sectors ruined by the circumstances. Briefly, the domestic crisis started to change the consumer behaviors. People reduced their spending and that effected the volume of the...
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...Outline 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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