A functional overview of financial crises development and propagation

Popa, Catalin C. (2008): A functional overview of financial crises development and propagation. Published in: Knowledge Based Organization 2008 International Conference, November 2008, Sibiu, Romania , Vol. 3, No. ISSN 1843-6722 (15 November 2008): pp. 278-282.

Abstract

The U.S. sub-prime crise developed in the last few months as a dangerous syncope for the entire international financial system, recall for the rethinking of market functionality, revealing the international institutional weakness in financial system supervision on global scale. The mortgage volatility induced by the international dereglementation and derivates contemporary burst, correlated with a relaxed supervision framework, transformed progressively the credit market into a system “bubble”, making possible the distortion of real estates values toward those levels forced by creditors. Throughout a weakness chain, many financial institutions, determined by a savage competition on this sector, left away the prudence and borrowed money from different investors, guarantying the long terms transactions, with short time derivates from speculative short-term market, supplying the bubble. In this context, the paperwork is meant to recall for reinventing the risks models, so that the crises to be anticipated earlier than its development moment.

• Item Type: MPRA Paper
• Language: English
• Keywords: globalization, financial crise, global economy, monetary system, international management
• Subjects: F - International Economics > F5 - International Relations, National Security, and International Political Economy > F59 - Other; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E52 - Monetary Policy; F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F41 - Open Economy Macroeconomics; G - Financial Economics > G3 - Corporate Finance and Governance > G32 - Financing Policy ; Financial Risk and Risk Management ; Capital and Ownership Structure ; Value of Firms ; Goodwill; F - International Economics > F3 - International Finance > F36 - Financial Aspects of Economic Integration

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