Contagion Effects Of Financial Crisis Research Articles

Empirical Research on the Contagion Effect of Financial Crisis

The international financial crisis has caused broad impact and serious consequences to international economic order and the economic development of every country. Therefore, making modeling research on the effect of crisis contagion between some economic markets in order to take timely measures to prevent the further spread of contagion is of great significance for maintaining a countrys economic security, and the stability of global economic and financial system. To prevent economy from being destroyed by financial crisis contagion, this paper puts forward a new testing approach on the contagion effect of financial crisis. This approach is to test the contagion effect of financial crisis by examining whether the conditional variances of different countries financial markets in crisis period are correlated through Generalized Autoregressive Conditional Heteroskedasticity model. Empirical study shows that, this new approach is effective and practical in testing the contagion effect of financial crisis.

The Contagion Effects of Financial Crisis on Stock Markets: What Can We Learn From a Cointegrated Vector Autoregressive Approach for Developed Countries?

Esta investigacion aplica un conjunto de pruebas diversificadas que no se han utilizado en forma conjunta para estudiar los efectos de contagio de las crisis financieras en los mercados bursatiles de los paises desarrollados. Esto es particularmente importante debido al hecho de que en la literatura existente no se abordan adecuadamente los efectos de las crisis financieras en dichos mercados. Se realizan varias pruebas empiricas en forma conjunta: pruebas de correlacion; de Kolmogorov-Smirnov; de valor extremo; y las pruebas basadas en la estimacion de modelos de vectores autorregresivos cointegrados. Se muestra evidencia significativa de efectos de contagio durante la crisis asiatica, la crisis de Rusia y la crisis del 11 de Septiembre. Por ultimo, los efectos de contagio encontrados durante las crisis en Brasil, Argentina y Mexico son limitados.

The Development of Financial Markets in Poland

This project analyzing the development of Polish financial markets sponsored by the USAID grant was aimed at examining selected problems of the banking system and financial markets in Poland. The main criterion for selection of these problems was their potential usefulness for policy-makers at the present stage of the economic transformation. The studies within the project address the issues that require special attention of policy-makers in their efforts to design future stages of the economic transformation and to formulate a program of effective preparations for the EU accession. The topics examined include: the advancement of risk management in the banking system, the economic and legal aspects of capital account liberalization, contagion effects of world financial crises, and sensitivity of financial markets to Exchange rate policies. The studies find visible improvements in the methodology of risk management in the banking system in Poland and in the institutional framework of financial markets. It is further suggested that a larger participation of foreign, more experienced banks Gould improve efficiency of Poland's financial institutions. It remains debatable whether the banks ought to evolve in the directions of universal or specialized institutions. The financial system is prone to contagion effects of external financial crises as documented by the impact of the Asian and the Russian crisis episodes. Several measures aimed at developing an effective cushion against potential contagion effects of financial crisis are proposed. They include: an effective system of bank monitoring and supervision, a lower reliance on debt in relation to equity, a low (less than a multiple of three) ratio of M2 money to foreign exchange reserves, a higher degree of transparency of financial institutions, more transparent fiscal and monetary policies, and a significant increase in national savings. The advancement of capital account liberalization shall not be restrained by taxes on foreign exchange transactions or by similar measures aimed at containing capital flows. Capital controls could be devastating to still very fragile and volatile Polish financial markets.

A Critical Survey on the Contagion Effects of Financial Crisis

This paper critically reviews theoretical and empirical studies on financial contagion. The East Asian crisis in 1997 as well as the Mexican crisis in 1994 saw the serious spillover of financial turbulences among different countries, and consequently this has encouraged theoretical and empirical investigation of financial contagion effects. However, rigorous evaluation and assessment of existing studies are yet to be made. In this paper, we introduce and critically evaluate previous studies on the definitions and phenomena, and causes of financial contagion effects. We also discuss effective policy measures to contain them, and topics for future studies.