...3.1 Financial Globalisation and Sources of the Crisis Did the rise in cross-border .nancial trade contribute to the origination of the global .nancial crisis? It is possible to identify two main channels by which .nancial globalisation contributed to the .nancial conditions that ultimately gave rise to the crisis. First, the participation of foreign investors (especially foreign banks) fuelled the accel- erated growth of the asset-backed securities markets in the United States that were central in the original market panic in 2007-2008. As documented by Acharya and Schnabl (2009) and Bernanke et al (2011), European banks were major purchasers of asset-backed secu- rities. In large part, these banks also obtained dollar funding in the US money markets, as detailed by Shin (2011). For this reason, the role of European banks in enabling the expansion of the US ABS markets did not jump out of the balance of payments data, although the implicit risk exposure of European parent banks grew in line with these US activities. Second, .nancial globalisation permitted rapid growth in the balance sheets of many banks. This took place at two levels. In relation to globally-active banks, the size and complexity of these banks grew rapidly, making it di¢ cult for national regulators to adequately police risk pro.les. In addition, the capacity of local banks to expand lending by tapping international wholesale markets fuelled credit growth in a number of countries. Third, the...
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...SUBSCRIBE NOW and Get CRISIS AND LEVIATHAN FREE! Subscribe to The Independent Review and receive your FREE copy of the 25th Anniversary Edition of Crisis and Leviathan: Critical Episodes in the Growth of American Government, by Founding Editor Robert Higgs. The Independent Review is the acclaimed, interdisciplinary journal by the Independent Institute, devoted to the study of political economy and the critical analysis of government policy. Provocative, lucid, and engaging, The Independent Review’s thoroughly researched and peer-reviewed articles cover timely issues in economics, law, history, political science, philosophy, sociology and related fields. Undaunted and uncompromising, The Independent Review is the journal that is pioneering future debate! Student? Educator? Journalist? Business or civic leader? Engaged citizen? This journal is for YOU! SEE MORE AT: INDEPENDENT.ORG/TIROFFER SUBSCRIBE to the The Independent Review NOW and q Receive a FREE copy of Crisis and Leviathan OR choose one of the following books: Beyond Politics The Roots of Government Failure By Randy T. Simmons The Challenge of Liberty Classical Liberalism Today Edited by Robert Higgs and Carl Close Lessons from the Poor Triumph of the Entrepreneurial Spirit Edited by Alvaro Vargas Llosa Living Economics Yesterday, Today and Tomorrow By Peter J. Boettke q q q q q YES! Please enroll me with a subscription to The Independent Review for: q Individual Subscription: $28.95 / 1-year (4 issues)...
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...SW Broadway, Portland, OR 97201, USA a b s t r a c t JEL classification: F31 F36 F41 O24 Keywords: Impossible trinity International reserves Financial liberalization Financial crisis Exchange rate regime This paper investigates the potential impacts of the degree of divergence in open macroeconomic policies in the context of the trilemma hypothesis. Using an index that measures the relative policy divergence among the three trilemma policy choices, namely monetary independence, exchange rate stability, and financial openness, we find that emerging market countries have adopted trilemma policy combinations with the least degree of relative policy divergence in the last 15 years. We find that a developing or emerging market country with a higher degree of relative policy divergence is more likely to experience a currency or debt crisis. However, a developing or emerging market country with a higher degree of relative policy divergence tends to experience smaller output losses when it experiences a currency or banking crisis. Latin American crisis countries tended to reduce their financial integration in the aftermath of a crisis, while this is not the case for the Asian crisis countries. The Asian crisis countries tended to reduce the degree of relative policy divergence in the aftermath of the crisis, probably aiming at...
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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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...About the BAT with Sample Questions Table of Contents Introduction Test Overview Sample Questions Scoring Introduction We are excited about your participation in the Bloomberg Aptitude Test (BAT). The BAT is a global, standardized online exam that the Bloomberg Institute has developed in partnership with premier companies, university faculty, and business professionals around the world. The test is designed for undergraduates and recent graduates who are interested in an entry‐level job in the business world. The following information packet is intended to familiarize you with the content and structure of the BAT. Enclosed you will find information about the test’s goals, sections, and scoring. There is also a list of annotated sample questions for you to review. If you have any additional questions about the content of the test, please feel free to contact us at bat@bloomberginstitute.com. Table of Contents Introduction Test Overview Sample Questions Scoring Test Overview The BAT aids employers in identifying and screening students who wish to pursue a career in business and finance. Test takers should have a general understanding of and familiarity with current events in business, finance, and economics. However, we are not assessing knowledge: we are assessing a person’s aptitude to be successful in these fields, regardless of background. 2 Hours 8 Sections 100 Questions Chart and Graph Analysis 12% News Analysis 12% Global Markets 14% ...
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...Crisis Period Forecast Evaluation of the DCC-GARCH Model Yang Ding Andrew Schwert Dr. Emma Rasiel & Professor Aino Levonmaa, Faculty Advisors Honors thesis submitted in partial fulfillment of the requirements for Graduation with Distinction in Economics in Trinity College of Duke University Duke University Durham, North Carolina 2010 Acknowledgements We would like to thank Dr. Emma Rasiel and Professor Aino Levonmaa for their invaluable direction, patience, and guidance throughout this entire process. Abstract The goal of this paper is to investigate the forecasting ability of the Dynamic Conditional Correlation Generalized Autoregressive Conditional Heteroskedasticity (DCC-GARCH). We estimate the DCC’s forecasting ability relative to unconditional volatility in three equity-based crashes: the S&L Crisis, the Dot-Com Boom/Crash, and the recent Credit Crisis. The assets we use are the S&P 500 index, 10-Year US Treasury bonds, Moody’s A Industrial bonds, and the Dollar/Yen exchange rate. Our results suggest that the choice of asset pair may be a determining factor in the forecasting ability of the DCC-GARCH model. I. Introduction Many of today’s key financial applications, including asset pricing, capital allocation, risk management, and portfolio hedging, are heavily dependent on accurate estimates and well-founded forecasts of asset return volatility and correlation between assets. Although volatility and correlation forecasting are...
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...A COMPARISON BETWEEN ISLAMIC AND TRADITIONAL BANKS: PRE AND POST THE 2008 FINANCIAL CRISIS Mohamed Hashem Rashwan1 The British University in Egypt ABSTRACT This study tests the efficiency and profitability of banks that belongs to two different sectors: a) Islamic Banks (IBs) and b) Traditional Banks (TBs). The study concentrates on the pre and post 2008 financial crisis with an aim to test if there are any significant differences in performance between the two sectors. The study applies the MANOVA techniques to analyze the financial secondary data for only publicly traded banks in the same region. The findings of the study show that there is a significant difference between the two sectors in 2007 and 2009 and there are no significant differences in 2008, which indicates the effect of the crisis on both sectors. IBs outperform TBs in 2007 and TBs outperform IBs in 2009. This result indicates the spread of the crisis to the real economy where IBs usually operate. INTRODUCTION Forty years ago Islamic Finance was virtually an unknown system; interestingly it has expanded to become a distinctive and fast growing segment of the International Financials markets. With a growth rate that ranges from 15% to 20% (EL- Qoroshy 2005). Islamic Finance in general and Islamic banking in specific become main players in the financial world. According to the IMF survey (2010) the total capital managed under Islamic Finance systems was estimated to be $820 billion at the end of 2008. More than...
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...Global Social Finance Research 02 May 2012 Volume Growth and Valuation Contraction Global Microfinance Equity Valuation Survey 2012 J.P. Morgan Global Research J.P. Morgan Social Finance Yasemin Saltuk Yasemin Saltuk AC (44-20) 7742-6426 (44-20) 7742-6426 yasemin.x.saltuk@jpmorgan.com yasemin.x.saltuk@jpmorgan.com J.P. Morgan Securities Ltd. J.P. Morgan Equity Research Frederic de Mariz (55-11) 4950-3398 frederic.de.mariz@jpmorgan.com Banco J.P. Morgan S.A. CGAP Jasmina Glisovic Henry González This report is the result of a collaborative effort between CGAP and J.P. Morgan. J.P. Morgan analysts are solely responsible for the investment opinions and recommendations, if any, in this report. See page 21 for analyst certification and important disclosures. J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that See page 21 for important disclosures. the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. www.morganmarkets.com Global Microfinance Equity Valuation Survey 2012 Global Social Finance Research 02 May 2012 Background & Acknowledgements Equity capital flows into microfinance have been increasing for many years, with both retail and institutional investors showing interest in this sector of financial services. Despite this growth...
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...Get to Know the BAT Table of Contents Introduction Test Overview Sample Questions Scoring Introduction We are excited about your participation in the Bloomberg Assessment Test (BAT). The BAT is a global, standardized online exam that the Bloomberg Institute has developed in partnership with premier companies, university faculty, and business professionals around the world. The test is designed for undergraduates and recent graduates who are interested in an entry‐level job in the business world. The following information packet is intended to familiarize you with the content and structure of the BAT. Enclosed you will find information about the test’s goals, sections, and scoring. There is also a list of annotated sample questions for you to review. If you have any additional questions about the content of the test, please feel free to contact us at bat@bloomberginstitute.com. Table of Contents Introduction Test Overview Sample Questions Scoring Test Overview The BAT aids employers in identifying and screening students who wish to pursue a career in the business world. Test takers should have a general understanding of and familiarity with current events in business, finance, and economics; however, much of what is being assessed is a person’s aptitude and skills to be successful in business. 3 hours 10 sections 150 questions The following pages discuss the different sections of the BAT and the concepts you can expect to see. Test Overview ...
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...CHAPTER ONE INTRODUCTION 1.1 BACKGROUND OF STUDY Nigeria banking sector has experienced a boom-and-burst cycle in the past 20-25 years. After the implementation of the structural adjustment programme (SAP) in 1986 and de-regulation of the financial sector, new banks proliferated mainly driven by attractive arbitrage opportunities in the foreign exchange market (Heiko 2007), but prior to the de-regulation period, financial intermediation never took off and even declined in the1980’s and 1990’s (Capirio and Kligbiel). The sector was highly oligopolistic with remarkable features of market concentration and leadership. Lemo noted that there are ten banks that control more than 50% of the aggregate assets of the banking sector, more than 51% of the aggregate deposits liabilities and more than 45%of the aggregate credits. The sector was characterized by small scale banks with high overheads; low capital base averaging less than $10 million; heavy reliance on the government patronage and loss making. Nigeria‘s banking sector was still characterized by a high degree of fragmentation and low level of financial intermediation up to 2004. This research work is motivated by the need to look into the Central bank (CBN)’s recent reform (consolidation) that employed certain measures to strengthen the Nigeria banking system by drastically increasing the minimum capital requirement from N2 million to N25 billion ($190 million-US). Through review of relevant literatures, analysis...
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...terms of population, a factor that they could later leverage when they would start to open up. Slowly even with relatively lower per capita GDP but a big enough population and favourable age structure their overall impact in world economy could no longer be ignored. In the meantime, Developed countries were at their peak. The way in which business would be done was changing world over. Spurred by the information technology (IT) revolution, trade liberalization and other economic reforms, the entry of an estimated 2 billion people into the labor force as a result of the breakdown of the Soviet bloc and the opening of China, and the freer movement of capital and technology from developed countries to developing countries, the size of the global economy doubled over the decade preceding the 2008-2009...
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...UNIVERSITY OF NAIROBI INSTITUTE OF DIPLOMACY AND INTERNATIONAL STUDIES Implications of Global International Monetary Policy Decision on Economic Systems in East Africa: A Case Study of Kenya NAME: LILLIAN WACHIRA REG NO: R50/63875/2010 Supervisor: Dr. Gerrishon Ikiara A Research Proposal submitted in partial fulfillment of the Degree of Masters of Arts in International Studies (MA IS) DECLARATION I declare that this research proposal is my original work and has not been presented for a degree in any other university. NAME: LILLIAN WACHIRA REG. NO: R50/63875/2010 Sign: ………………………………… Date: ……………………… This research proposal has been submitted for examination with my approval as university supervisor SUPERVISOR: Sign: ……………………………… Date: …………………………. DEDICATION I dedicate my project to my lovely mother Beatrice, my brothers Edwin and Eric whose prayers words of encouragement and push for tenacity ring in my ears. ACKNOWLEDGEMENT I would like to express my sincere gratitude to my supervisor Dr. Gerrsihon Ikiara for the continuous support and guidance while carrying out my project, for his patience, motivation and immense knowledge. I would also like to thank the participants in my survey, who have willingly shared their precious time during the process of interviewing. I...
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...cite each type of reference in the ‘Reference List’ at the END of your assignment. This list of references provides your reader with all the information about each source you have referred to in your assignment, so they can find each source you have referred to if they wish. Here are some useful terms with which you need to be familiar: A paraphrase means saying something in another way without changing its meaning, for example, using your own words to express the ideas of an author. A paraphrase may/may not be shorter than the original. A summary is similar to a paraphrase except it is shorter than the original. Summarising involves ‘compressing’ large amounts of information into a few sentences. So it involves picking out the main ideas, leaving out the details, and putting the main ideas into your own words. A quotation involves reproducing the EXACT words from a source. Quotations must be carefully selected and copied from the original source material, and should be sparingly used to support your arguments or the key points you wish to make. If you wish to use a short quotation, you...
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...the Financial Crisis? Christian Laux and Christian Leuz I n its pure form, fair-value accounting involves reporting assets and liabilities on the balance sheet at fair value and recognizing changes in fair value as gains and losses in the income statement. When market prices are used to determine fair value, fair-value accounting is also called mark-to-market accounting. Some critics argue that fair-value accounting exacerbated the severity of the 2008 financial crisis. The main allegations are that fair-value accounting contributes to excessive leverage in boom periods and leads to excessive write-downs in busts. The write-downs due to falling market prices deplete bank capital and set off a downward spiral, as banks are forced to sell assets at “fire sale” prices, which in turn can lead to contagion as prices from asset fire sales of one bank become relevant for other banks. These arguments are often taken at face value, but evidence on problems created by fair-value accounting is rarely provided. We discuss these arguments and examine descriptive and empirical evidence that sheds light on the role of fair-value accounting for U.S. banks in the crisis. While large losses can clearly cause problems for banks and other financial institutions, the relevant question for our article is whether reporting these losses under fair-value accounting created additional problems. Similarly, it is clear that determining fair values for illiquid assets in a crisis is very...
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...governments and other financial institutions use to project the economy imply that the world economy is shrinking. Since 2008, the state of the American economy has not been attractive. For instance, the United States economy has not registered any significant growth for the last three years. The 2011 second quarter results indicated that gross domestic product improved by 1%. At the same time, there was slight increase in business fixed investment sector. This was mainly attributed to good performance in software and equipment. In general, the economy seems to be headed for recovery (United Nations, 2010). There were increased product and services exports as well as over growth in consumer spending. Overall federal government spending increased. This was as a result of increased government spending in military. The issue of oil and turmoil in oil producing countries especially in North Africa has contributed negatively to the economy. High energy costs mean that most sections of the economy will experience high production costs. Final products will be more costly to the consumer and thus leading to reduced consumer spending. A broader look at the state of the economy reveals that the economy is headed for a recovery. Most core sections of the economy have begun to register growth meaning that soon the economy will bounce back (United Nations, 2010). Macroeconomic Snapshots and Forecast Several surveys have been conducted to determine the financial situation of United...
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