Stages of the 2007/2008 Global Financial Crisis: Is there a Wandering Asset Price Bubble?
Lucjan T. Orlowski
Economics E-Journal 43. Munich Personal RePEc Archive 2008,
2009
Abstract
This study identifies five distinctive stages of the current global financial crisis: the meltdown of the subprime mortgage market; spillovers into broader credit market; the liquidity crisis epitomized by the fallout of Northern Rock, Bear Stearns and Lehman Brothers with counterparty risk effects on other financial institutions; the commodity price bubble, and the ultimate demise of investment banking in the U.S. The study argues that the severity of the crisis is influenced strongly by changeable allocations of global savings coupled with excessive credit creation, which lead to over-pricing of varied types of assets. The study calls such process a “wandering asset-price bubble“. Unstable allocations elevate market, credit, and liquidity risks. Monetary policy responses aimed at stabilizing financial markets are proposed.
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Banking Integration, Bank Stability, and Regulation: Introduction to a Special Issue of the International Journal of Central Banking
Reint E. Gropp, H. Shin
International Journal of Central Banking,
No. 1,
2009
Abstract
The link between banking integration and financial stability has taken center stage in the wake of the current financial crisis. To what extent is the banking system in Europe integrated? What role has the introduction of the common currency played in this context? Are integrated banking markets more vulnerable to contagion and financial instability? Does the fragmented regulatory framework in Europe pose special problems in resolving bank failures? What policy reforms may become necessary? These questions are of considerable policy interest as evidenced by the extensive discussions surrounding the design and implementation of a new regulatory regime and by the increasing attention coming from academia.
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Aktuelle Trends: Überraschend stabile Geschäftsaussichten auswärtiger Investoren in Ostdeutschland für das Jahr 2009
Björn Jindra, Jutta Günther, Johannes Stephan
Wirtschaft im Wandel,
No. 2,
2009
Abstract
Zwischen dem 16. Oktober und 10. Dezember 2008 hat das IWH 657 Tochtergesellschaften ausländischer und westdeutscher multinationaler Investoren mit Sitz in den Neuen Bundesländern zu den Erwartungen für das Geschäftsjahr 2009 befragt. Diese Unternehmen haben in der ostdeutschen Wirtschaft ein erhebliches Gewicht, so arbeitet z. B. jeder vierte Arbeitnehmer im Verarbeitenden Gewerbe für ein Unternehmen mit auswärtigen Investoren.
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Editorial
Jutta Günther
Wirtschaft im Wandel,
No. 2,
2009
Abstract
Die ostdeutsche Wirtschaft ist von der Finanz- und Konjunkturkrise weniger stark betroffen als die westdeutsche. Natürlich ist der Einbruch auch in Ostdeutschland spürbar, aber es wird keinen „Dammbruch“ geben, so die Prognose des IWH. Die strukturellen Schwächen gereichen der ostdeutschen Wirtschaft in der Krise zum Vorteil. Wer hätte das gedacht? Das Fehlen international operierender Konzernzentralen und – eng damit verbunden – die geringere Integration in den internationalen Handel mildern die Probleme. Selbst die Gruppe der auswärtigen Investoren in den Neuen Bundesländern meldet überraschend positive Geschäftsaussichten für das Jahr 2009, wie der Aktuelle Trend in diesem Heft zeigt.
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Aktuelle Trends: Druck auf Photovoltaik-Industrie nimmt zu
Matthias Brachert, Christoph Hornych, Jutta Günther
Wirtschaft im Wandel,
No. 1,
2009
Abstract
Die deutsche Photovoltaik-Industrie ist seit der Einführung des Erneuerbare-Energien-Gesetzes (EEG) im Jahr 2000 durch starkes Wachstum gekennzeichnet. Die im EEG enthaltene Festlegung garantierter Einspeisevergütungen führte zu enormen Nachfragesteigerungen, die den Ausbau der Produktionskapazität an Solaranlagen stets überstiegen. Die resultierende Knappheit von Solaranlagen schuf einen attraktiven Markt für Unternehmen − Markteintritte, Beschäftigungswachstum und umfangreiche Investitionen in den Ausbau der Produktionskapazitäten wurden ermöglicht. Dieser Trend setzt sich bis heute fort und führt zur positiven aktuellen Einschätzung der Geschäftssituation der Photovoltaik-Industrie − hier am Beispiel der Installateure.
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Business Cycle Forecast 2009: World Financial Crisis Triggers Deep Recession in Germany
Wirtschaft im Wandel,
No. 1,
2009
Abstract
At the beginning of 2009, the major industrialized economies are in recession. The financial turmoil has developed into a crisis of confidence to and solvency of the financial sector, raising financing costs and lowering the value of assets for firms and households. Monetary and fiscal policies have reacted strongly, but they will not succeed in ending the recession until the financial sectors in the US and in Western Europe have stabilized. This forecast is made under the assumption that stabilization will start in the second half of 2009 because the continued protection of important financial institutions by governments will restore confidence – albeit at a low level – and because at this time, the fall of US-house prices will start to fade off.
The German economy is hit particularly hard, because the financial crisis depresses worldwide investment demand and the sectors producing investment goods are at the heart of the German economy. The recession will not end before the second half of 2009, and capacity utilization will decrease throughout the year. We expect a tentative revival to begin in a recovery of exports. While private investment will shrink markedly, consumption of private households and the government as well as public investment will dampen the downturn. GDP will shrink by 1.9% in Germany and in East Germany by 1.5% because this region is less dependent on exports.
Economic policy has to help restoring confidence, and this can only be achieved if it behaves in a consistent and predictable way.
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A Lesson Learned? Pre- and Post-Crisis Entry Decisions in Turkish Banking
H. Evren Damar
Contemporary Economic Policy,
No. 1,
2009
Abstract
This study looks at the determinants of entry by Turkish banks into local markets during the periods before and after the crisis of 2000–2001. Motivated by a theoretical model of entry, results of fixed-effects logit regressions suggest that there has been a change in the geographical diversification strategies of Turkish banks. It appears that the dominance of strategic concerns, such as competing with banks of similar size, has diminished, while economic concerns, such as incumbent characteristics and cost considerations, have become more important. Overall, the postcrisis restructuring policies seem to have led to improved decision making in the sector.
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Financial Crisis Burdens Economic Activity in Poland
Martina Kämpfe
Wirtschaft im Wandel,
No. 12,
2008
Abstract
In the first half of the year 2008, domestic demand –the main force behind growth – only marginally declined. Still extraordinarily high was the demand for the output of construction firms. Although demand from Western European countries declined since spring, the foreign trade was not much behind its level of the previous year because of high export activity to Asian and Eastern European countries. In the second half of the year, both, the finance and banking system as well as the real economy, were impacted by the consequences of global financial crisis. Indications of that are the temporary collapse of the polish stock market, the rapid fall of the Złoty and the weakening of domestic demand and exports. Against this background, expansion of economic activity in 2009 will continue at a markedly lower level.
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Crisis Contagion in Central and Eastern Europe
Hubert Gabrisch
Wirtschaft im Wandel,
No. 12,
2008
Abstract
The global financial crisis reached the Central and Eastern European region. Fears of a recession are spreading among investors in Russia and the Ukraine due to the heavy decline of oil and steel prices and provoked a first wave of short-term capital withdrawals. The export sector of all countries in the region is affected by weakening global demand. Finally, the financial sector, which is dominated by international banks in almost all countries, appears as the contagion channel for risk adjustments of mother banks. The combined impact of all these causes and channels lead to a proliferation of restrictions in credit and money supply and an outflow of investment capital. A strong weakening of economic growth is on the way in the region, and a long-lasting recession seems possible in some countries, in first line in the Baltic countries. It becomes a superior task of governments to ease the length and depth of the approaching recession by a strong fiscal stimulus. A continuation of the present policy of fiscal consolidation or of nominal convergence toward a quick adoption of the Euro does not seem very advisable. If governments decided to support domestic demand, measures should be taken to strengthening of a genuinely domestic banking sector in order to maintain credit availability.
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Forecasting Currency Crises: Which Methods signaled the South African Crisis of June 2006?
Tobias Knedlik, Rolf Scheufele
South African Journal of Economics,
2008
Abstract
In this paper we test the ability of three of the most popular methods to forecast South African currency crises with a special emphasis on their out-of-sample performance. We choose the latest crisis of June 2006 to conduct an out-of-sample experiment. The results show that the signals approach was not able to forecast the out-of-sample crisis correctly; the probit approach was able
to predict the crisis but only with models, that were based on raw data. The Markov-regime- switching approach predicts the out-of-sample crisis well. However, the results are not straightforward. In-sample, the probit models performed remarkably well and were also able to detect, at least to some extent, out-of-sample currency crises before their occurrence. The recommendation is to not restrict the forecasting to only one approach.
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