EFFECTS OF GLOBAL FINANCIAL CRISIS IN DEVELOPED AND EMERGING FINANCIAL MARKETS

Нермина Побрић

Authors

Нермина Побрић Економски факултет у Брчком, Универзитет у Источном Сарајеву

Keywords:

global financial crisis, mortgage market crisis, developed financial markets, emerging financial markets

Abstract

The influence of the crisis on developed, developing and emerging market countries will come through real and financial sectors. While the transmission mechanisms through trade are straightforward, those through financial channels appear to be more challenging as financial linkages have been more complicated than international trade.

Anxiety about the possibility of financial crisis to arise in other great depression led to a drastic slowdown in stock market and significant loss of confidence by consumers and firms in market institutions around the world. In the financial sector in developed markets banking sector was the most and insurance sector was the least affected by the crisis. Financial crisis influenced banks around the world through increased uncertainty about the debtor quality and decreased availability of financing sources. Through deteriorating county’s fiscal position financial crisis affected deterioration of government bond market performances.

Emerging market countries were less affected during the initial stages of the crisis than developed economies. But the persistence of the market dislocations, the deterioration of economic fundamentals in developed economies and rising global risk aversion significantly affected emerging market countries by late 2008. Countries with large current account deficits and whose banks prior to the crisis have been most reliant on foreign wholesale funding have been mostly affected by the ramifications of the financial crisis.

References

Adamu, A., (2009), „The Effects of Global Financial Crisis on Nigerian Economy”, available at SSRN: http://ssrn.com/abstract=1397232.

Arner, D.W., (2009), „The Global Credit Crisis of 2008: Causes and Consequences”, The International Lawyer, Vol 43, No. 1, pp. 101‐190.

Bartram, S.M. and G.M. Bodnar, (2009), „No Place to Hide: The Global Crisis in Equity Markets in 2008/09”, available at SSRN: http://ssrn.com/abstract=1413914.

Blanchard, O., (2009), „The Crisis: Basic Mechanisms, and Appropriate Policies”, International Monetary Fund, WP/09/80.

Cannata, F. and M. Quagliariello, (2009), „The Role of Basel II in the Subprime Financial Crisis: Guilty or not Guilty?”, CAREFIN, Working Paper No. 3/09.

De Hass, R. and N. Van Horen, (2009), „The Crisis as a Wake Up Call: Do Banks Tinghten Lending Standards During a Financial Crisis?”, available at SSRN: http://ssrn.com/abstract=1436542.

Ellis, L., (2008), „The Housing Meltdown: Why Did It Happen in the United States”, BIS, Working Paper No. 259.

Frank, N. and H. Hesse, (2009), „Financial Spillovers to Emerging Markets During the Global Financial Crisis”, International Monetary Fund, WP/09/104.

Friedman, H.H. and L.W. Friedman, (2009), „The Global Financial Crisis of 2008: What Went Wrong”, available at SSRN: http://ssrn.com/abstract=1356193.

Gokhale, J., (2009), „Financial Crisis and Public Policy”, Policy Analysis No. 643.

Griffith‐Jones, S. and J.A. Ocampo, (2009), „The Financial Crisis and Its Impact on Developing Countries”, International Policy Centre for Inclusive Growth, Working Paper No. 53.

Hellwig, M., (2008), „Systemic Risk in the Financial Sector: An Analysis of the Subprime‐Mortgage Financial Crisis”, Max Planck Institute for Research on Collective Goods, Bonn, 2008/43.

Jara, A., R. Moreno and C.E. Tovar, (2009), „The Global Crisis and Latin America: Financial Impact and Policy Responses”, BIS Quarterly Review, June 2009.

Lee, J‐W. and C‐Y. Park, (2008), „Global Financial Turmoil: Impact and Challenges for Asia's Financial Systems”, Asian Development Bank, Working Paper Series on Regional Economic Integration No. 18.

Marphy, A., (2008), „An Analysis of the Financial Crisis of 2008: Causes and Solutions”, available at SSRN: http://ssrn.com/abstract=1295344.

Mayer‐Foulkes, D., (2009), „Long‐Term Fundamentals of the 2008 Economic Crisis”, Centro de Investigacion y Docencia Economicas (CIDE), Mexico.

Orlowski, L.T., (2008), „Stages of the 2007/2008 Global Financial Crisis: Is There a Wandering Asset‐Price Bubble?”, MPRA Paper No. 12696.

Pomerleano, M., (2009), „What Is the Impact of the Global Financial Crisis on the Banking System in East Asia?”, Asian Development Bank Institute, Working Paper No. 146.

Sgherri, S. and E. Zoli, (2009), „Euro Area Sovereign Risk During the Crisis”, International Monetary Fund, WP/09/222.

Socol, C. and A. Hrebenciuc, (2008), „Effects of International Financial Turbulences: Extension on Romanian Economy, Prevention Solutions”, Theoretical and Applied Economics, Vol. 8, August, pp. 31‐42.

Wilmarth, A.E., (2009), „The Dark Side of the Universal Banking: Financial Conglomerates and the Origines of the Subprime Financial Crisis”, Connecticut Law Review, Vol 41, No. 4, pp. 962‐1050.

Zaman, C., (2009), „Romania and the Global Crisis: From Excessive Confidence to High Uncertainty”, available at SSRN: http://ssrn.com/abstract=1368694.

Zaman, C., (2008), „World Financial Crisis: Possible Impact on Developing Countries”, available at SSRN: http://ssrn.com/abstract=1285432.

Zhang, Z., W. Zhang and G. Han, (2009), „How Does the US Credit Crisis Affect the Asia‐Pacific Economies? – Analysis Based on General Equilibrium Model”, Hong Kong Monetary Authority, Working Paper No. 12/2009.