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Market Crises (market + crisis)

Distribution by Scientific Domains

Business, Economics, Finance and Accounting	100%

Selected Abstracts

Financial Market Crises and Natural Resource Production

INTERNATIONAL REVIEW OF FINANCE, Issue 1 2010
JAMES R. BROWN
ABSTRACT During a financial crisis, the loss of access to world capital markets may force heavily indebted countries to accelerate their production of exhaustible resources. Few studies consider the impact that financial crises have on real behavior, and no existing studies appear to consider the impact a crisis might have on resource production. We find that four major state-owned enterprises in Brazil, Chile and Mexico substantially expanded their production and world market share of copper, iron ore and oil during the 1980s' international financial crisis. There was also a very large expansion, followed by a sharp contraction, of production of tin in Brazil and silver in Mexico. In contrast, Indonesia , a major resource producer who did not succumb to the 1980s' financial crisis , did not accelerate production during the 1980s' crisis, and resource production in the United States sharply contracted during this period. Our study provides new insights into why the prices of natural resources are so volatile and highlights a previously unexplored reason for financial contagion: one country's efforts to service its debt can drive down resource prices and revenues to other indebted resource producers. [source]

The Role of Short-Termism in Financial Market Crises

AUSTRALIAN ACCOUNTING REVIEW, Issue 4 2009
John Nesbitt
The purpose of this paper is to examine the contribution short-termist behaviours have had in various financial market crises. The early warning signs and drivers of short-termism are investigated, as well as ways to mitigate short-termist behaviour and consequences in the future. Short-termism as defined for the purposes of this paper is the excessive focus on short-term performance, earnings and other metrics at the expense of attention being given to the development of a long-term strategy that promotes sustainable long-term value creation. [source]

The contribution of domestic and external factors to emerging market currency crises: an early warning systems approach,

INTERNATIONAL JOURNAL OF FINANCE & ECONOMICS, Issue 3 2007
Steven B. Kamin
Abstract In this paper, a modified ,early warning system' (EWS) approach is developed to identify the roles of domestic and external factors in emerging market crises. Several probit models of currency crises were estimated for 26 emerging market countries. These models were used to identify the separate contributions to the probabilities of crisis of domestic and external variables. We found that, relative to domestic factors, adverse external shocks and large external imbalances contributed little to the average estimated probability of crisis in emerging market countries, but accounted for much more of the spikes in the probability of crisis estimated to occur during actual crisis years. We interpret these results to suggest that while, on average over time, domestic factors have tended to contribute to much of the underlying vulnerability of emerging market countries, adverse swings in external factors may have been important in pushing economies ,over the edge' and into currency crisis. In consequence, the costs of giving up exchange rate flexibility through adoption of strongly fixed exchange rate regimes,e.g. currency boards or dollarization,may be quite high for some countries. Published in 2007 by John Wiley & Sons, Ltd. [source]

On currency crises and contagion

INTERNATIONAL JOURNAL OF FINANCE & ECONOMICS, Issue 2 2003
Marcel Fratzscher
Abstract This paper analyses the role of contagion in the currency crises in emerging markets during the 1990s. It employs a non-linear Markov-switching model to conduct a systematic comparison and evaluation of three distinct causes of currency crises: contagion, weak economic fundamentals, and sunspots, i.e. unobservable shifts in agents' beliefs. Testing this model empirically through Markov-switching and panel data models reveals that contagion, i.e. a high degree of real integration and financial interdependence among countries, is a core explanation for recent emerging market crises. The model has a remarkably good predictive power for the 1997,1998 Asian crisis. The findings suggest that in particular the degree of financial interdependence and also real integration among emerging markets are crucial not only in explaining past crises but also in predicting the transmission of future financial crises. Copyright © 2003 John Wiley & Sons, Ltd. [source]