Global Financial Meltdown Research Articles

Risk Analysis of Mortgage Loan Default for Bank Customers and AI Machine Learning

Abstract Risk Analysis of Mortgage Loan Default for Banks is a crucial issue. On one hand, it concerns the quality of the bank's credit decisions, and on the other hand, it affects the rights of homebuyers to obtain financial support. In 2008, the U.S. subprime mortgage crisis sparked a global financial meltdown. What began with the collapse of the housing market quickly spread throughout the global financial system, resulting in the failure of numerous banks and a widespread economic recession. Recently, the banking sector has increasingly leveraged Artificial Intelligence (AI) and Machine Learning (ML) to enhance decision-making processes, particularly in assessing the risk of mortgage loan defaults. This paper aims to explore the application of ML techniques to predict and analyze the risk of default among bank customers, thereby enabling financial institutions to make more accurate and informed lending decisions. Keywords: Mortgage Loan Default Risk Analysis AI ML K-MANS LTV.

South Africa’s Housing Financialisation Crises and Social Resistance

The world’s most unequal country suffers from various housing crises, especially when it comes to excessive reliance upon a private sector prone to market failures, especially affordability. State housing finance strategy during the transition from apartheid to democracy relied upon augmentation of formal banking finance so as to promote home ownership. But as macro-economic conditions changed in the late 1980s, the resulting mass defaults on individual families’ home mortgage bonds led not only to foreclosures by a (white) state, but (black) working-class resistance organised by the country’s leading urban social movement, known as the ‘bond boycott.’ Even after democracy, a worsening housing backlog coincided with resurgence of household debt crises in the wake of the 2008 global financial meltdown. That generated a new housing finance strategy led by Mastercard and a local fintech firm (supported by the World Bank): collateralisation of welfare grants which in turn allowed debit orders for repayment of microfinance (typically used for minor home improvements). Again, social resistance played an important role, as the strategy caused even worse personal debt crises, and a welfare NGO’s successful fight to close Mastercard’s partner. But beyond periodic revolts of these sorts, a durable housing finance policy has remained elusive.

Croatia’s Uneasy First Decade in the European Union

Croatia celebrated a decade of membership in the European Union by joining the euro currency and the Schengen Area of free movement on January 1, 2023. At the same time, however, the country is struggling with the economic, social, and political consequences of its semi-peripheral status. A series of reform challenges remain unsolved, including the continued dominance of clientelistic networks. Amid a set of overlapping crises, from the global financial meltdown to the COVID-19 pandemic, the country has seen a revival of conservative and patriarchal ideologies.

A network analysis on country and financial center attractiveness: Evidence from Asian economies, 2001–2018

By using a network analysis that incorporates both quantity and quality assessments, this paper investigates the two factors of country and financial brokerage center for investment attractiveness as the dynamic forces of development among Asian economies. The sample period of 2001–2018 is important for Asian economies as the region experienced the aftermath of the 1997 Asian financial crisis and the devastating 2008 global financial meltdown. The study developed an attractiveness index, investigated its underlying determinants, and diagnosed both country and financial attractiveness, which are then applied to the Asian economies. The empirical findings show that Asia's intra-regional attractiveness can also be used to explain their economic success.

Embracing Opportunity and Bracing for the Future: Renewal Discourse and Inoculation

This paper explores the potential to address mid-crisis communication needs in longitudinal crises by using a paired renewal discourse and inoculation messaging strategy. While renewal discourse focuses on inherent opportunities and the possibility for organizations to improve following a crisis, insulating stakeholder views from ongoing and future crisis effects with inoculation messaging during the crisis can improve the durability of positive outcomes. Theoretically driven rhetorical analysis is used to examine stakeholder communication from one of the two firms that survived The Weekend Wall Street Died in September 2008, a midpoint in the 18-month global financial meltdown. The results demonstrate mid-crisis as a distinct communication exigency and the applied use of a paired renewal discourse and inoculation strategy as a crisis and ongoing risk management approach.

Nonlinear Spillover and Dynamic Connectedness Between International Crude Oil and Dow Jones Islamic Market

This study examines crude oil prices throughout the world, as well as significant stock returns of European oil importers and exporters (the UK, Germany, France, Italy, Switzerland, and the Netherlands) (Norway and Russia). Indexes of sustainability stocks have a greater correlation with countries that import oil than with those that export oil. There was a stronger correlation between oil prices and stock prices both during and after the global financial meltdown in 2008. Study findings reveal a strong correlation between worldwide crude oil prices and major indices of countries that purchase or export oil. Our results have the potential to assist socially aware investors in hedging and diversifying their portfolios.

Asymmetry in forex market intervention: Does it reflect fear of reserve inadequacy?

The stylised facts indicate that the Reserve Bank of India (RBI) added significant amount of reserves to its kitty although there was a persistent pressure on rupee to depreciate in the aftermath of global financial meltdown that surfaced in the year 2008. We probe this issue by estimating an intervention policy reaction function, based on the theoretical framework of Surico (2003) and Srinivasan et al. (2009), that captures the preference asymmetry in official intervention. The time varying estimates of the intervention function suggest that the official response to rupee appreciation is significantly larger than to rupee depreciation of the same magnitude, especially during the post financial crises period. Such preference asymmetry in intervention seems to have been driven by the urge to maintain the level of reserve at an optimal level dictated by certain reserve adequacy metrics. Therefore, the asymmetry in official intervention, especially when the quantum of reserve holding is less than or closure to certain minimum critical level, essentially reflects the ‘fear of reserve inadequacy’ rather than the ‘fear of currency appreciation’ as it is claimed by earlier studies.

Introduction to the Special Issue: The Rise of State Capitalism

Ten years after the 2008 global financial meltdown, sufficient experience had been gathered to evaluate the long-term economic policy responses to the crisis. It seemed that developed market econom...

Topological features of multivariate distributions: Dependency on the covariance matrix

Topological data analysis provides a new perspective on many problems in the domain of complex systems. Here, we establish the dependency of mean values of functional p-norms of ’persistence landscapes’ on a uniform scaling of the underlying multivariate distribution. Furthermore, we demonstrate that average values of p-norms are decreasing, when the covariance in a system is increasing. To illustrate the complex dependency of these topological features on changes in the variance-covariance matrix, we conduct numerical experiments utilizing bi-variate distributions with known statistical properties. Our results help to explain the puzzling behavior of p-norms derived from daily log-returns of major equity indices on European and US markets at the inception phase of the global financial meltdown caused by the COVID-19 pandemic.

On the (in)efficiency of cryptocurrencies: have they taken daily or weekly random walks?

The legitimacy of virtual currencies as an alternative form of monetary exchange has been the centre of an ongoing heated debated since the catastrophic global financial meltdown of 2007–2008. Our study tests the informational market efficiency of cryptomarkets by investigating the weak-form efficiency of the top-five cryptocurrencies using random walk testing procedures which are robust to asymmetries and unobserved smooth structural breaks. Moreover, our study employs two frequencies of cryptocurrency returns, one corresponding to daily returns and the other to weekly returns. Our findings validate the random walk hypothesis for daily series hence validating the weak-form efficiency for daily returns. On the other hand, weekly returns are observed to be stationary processes which is evidence against weak-form efficiency for weekly returns. Overall, our study has important implications for market participants within cryptocurrency markets.

How Different is Heterodox Economists’ Thinking on Teaching? A Contrastive Evaluation of Interview Data

ABSTRACT This paper explores how differently heterodox and mainstream economists think about teaching. It draws on data from interviews with sixteen leading heterodox economists, which we analyse according to the principles of thematic analysis. We find considerable variety in heterodoxy. Further, we find evidence that suggests at least some heterodox economists share some elements with mainstream counterparts: on pedagogical practice, the role of their teachers, and scant explicit knowledge of educational philosophy. However, we discover different heterodox educational goals when compared to mainstream peers, mainly clustered around a concern for more radical open-mindedness and free-thinking. Also, some of our respondents showed a commitment to pluralism and critical approach to reality in teaching. Our interviews suggest that heterodox pedagogy is a reaction against and struggle within a uniquely hierarchical and monist discipline, pointing to the sociology and ideology of the economics profession as a shaping factor. We conclude that these characteristics make heterodox pedagogy better suited to foster understanding of complex real-world economic crises associated with global warming, pandemics, and financial meltdown.

Topological Features of Multivariate Distributions: Dependency on the Covariance Matrix

Topological data analysis provides a new perspective on many problems in the domain of complex systems. Here, we establish the dependency of the mean value of functional $p$-norms of 'persistence landscapes' on a uniform scaling of the underlying multivariate distribution. Furthermore, we demonstrate that the average value of $p$-norms is decreasing, when the covariance in a system is increasing. To illustrate the complex dependency of these topological features on changes of the covariance matrix, we conduct numerical experiments utilizing bi-variate distributions with known statistical properties. Our results help to explain the puzzling behavior of p-norms derived from daily log-returns of major equity indices on European and US markets at the inception phase of the global financial meltdown caused by the COVID-19 pandemic.

Examining the Economic Resilience of Nations Post the Global Financial Crisis: A Study for Select Leading Economies

The 2008 global financial crisis tested the macroeconomic strength of the economies of the world, broadly reflecting their competence to withstand such a global financial meltdown in terms of the extent of price stability, the degree of their endurance to the economic dynamism, their external trade position and the extent of openness to the international trade, economy’s fiscal position, and domestic competitiveness. At this juncture, it becomes imperative to evaluate the performance of the economies in the macroeconomic environment after the 2008 financial crisis. The present study attempts to analyse the Macroeconomic Resilience Index (MERI) of the top ten economies of the world in the years post the financial crisis of 2008. Additionally, through this paper, an assessment of the Post-Lehman Economics – the New Economic Order is made and implications for the post COVID-19 world are discussed.

Migration, Emigration, and Immigration: African Cartoonists Draw the Lines

Migration, Emigration, and Immigration: African Cartoonists Draw the Lines

Islamic Banking and Global Financial Crises: A Review of Liquidity Risk Management

The objective of this conceptual paper is to describe the resilience of Islamic banks during the 2008 and 2009 global financial meltdown. The growth of complex financial instruments which was aimed at spreading risk actually increased instability due to market fluctuations and speculative activities resulted to the Global Financial Crisis (GFC). Inadequate liquidity is the immediate cause of financial meltdown. The paper reviews the causes of liquidity risk in Islamic banks which is based on Shariah (Islamic Law) that prohibits charging of interest in business transactions. The study highlights the challenges of Islamic banks on liquidity in spite of its resilience during the crisis. Major causes of liquidity risk in Islamic banks were also discussed. The paper concludes with managerial and policy implications and the need to address the problem of managing liquidity risk in Islamic banks against possible future financial crisis. DOI: https://doi.org/10.5281/zenodo.4033805

Islamic Banking and Global Financial Crises: A Review of Liquidity Risk Management

The objective of this conceptual paper is to describe the resilience of Islamic banks during the 2008 and 2009 global financial meltdown. The growth of complex financial instruments which was aimed at spreading risk actually increased instability due to market fluctuations and speculative activities resulted to the Global Financial Crisis (GFC). Inadequate liquidity is the immediate cause of financial meltdown. The paper reviews the causes of liquidity risk in Islamic banks which is based on Shariah (Islamic Law) that prohibits charging of interest in business transactions. The study highlights the challenges of Islamic banks on liquidity in spite of its resilience during the crisis. Major causes of liquidity risk in Islamic banks were also discussed. The paper concludes with managerial and policy implications and the need to address the problem of managing liquidity risk in Islamic banks against possible future financial crisis.
 DOI: https://doi.org/10.5281/zenodo.4033805

Malaysia: 'Crouching Tiger, Hidden Dragon'

This paper metaphorically suggests that Malaysia could have been the 5th Asian Tiger if it were able to discover its special hidden talents as the idiom from the Chinese mythology “Crouching Tiger, Hidden Dragon” infers. Malaysia’s astounding economic track record (1985-96) underpinned by tamed inflation and high future prospects fell short of expectations in the late 1990s. Malaysia’s autocratic leaders and their instability-inflicting policies augmented uncertainty and undermined any potential recovery efforts in the aftermath of the homegrown Asian crisis of 1997-98. As a result, Malaysia’s promising outlook had abruptly shifted from being a model for the future to Asian myth. Malaysia’s GDP contracted mindboggling -7.4% in 1998 after averaging 9.2% in the period of 1992-96. The unthinkable shrinkage in the steady state output amounted to a loss of about $30 billion, the country’s GDP declined from $101 billion in 1996 to $72.2 billion in 1998. Malaysian people become a lot poorer after the crisis; the per capita income was $4,797 in 1996 as opposed to $3,264 in 1998, a decline of $1,533 in per capita income. Malaysia managed to escape the severe impacts of the near global financial meltdown with a minor dent; unlike the contraction observed in 1998 (-7.4%), Malaysia’s GDP dropped from 6.3% to 4.83% (2007-08) before contracting -1.51% in 2009. Despite the transparent and open economy (ranked 16th place in 2008 GCI) plus fast rise in the Human Development Index ranking (61st out of 190 countries in 2018), Malaysia’s heavy reliance on exports and its elongated addiction to the U.S. dollar made it become more prone to financial, currency, trade, and economic crises. The propagation of contemporaneous crises since the late 1990s have distinctly proved that Malaysia is hardly immune to shocks resulting from the slower economic growth in China and monetary normalizations in Europe and the U.S. which are causing interest rates to rise and exchange rate pressures to increase. Although the remarkable transition of Malaysia into a middle-income country was rather easy fostered by unusually favorable macroeconomic environment, but it seems to have been stuck in the middle-income trap and the next major economic leap to achieve a high-income status will require so much more than cheap labor and “mobilization of resources” based on “perspiration rather than inspiration”. Malaysia is struggling to figure out how to develop comprehensive skills which are essential to support future economic growth. Another problem is that educational institutions in Malaysia are not well aligned with industries to meet their demands; furthermore, a seamless coordination as well as collaboration between them is missing. Accordingly, a decade after the 2008 global financial crisis, Malaysia ranks 44th in pillar 4 (Health and Primary Education) and 41st in pillar 5 (Higher Education and Training). Malaysia also ranks 43rd in pillar 9 (Technological Readiness) due to a lack of lifelong learning programs, weakness in Technical and Vocational Education and Training (TVET), and unready for disruptive technologies. Without significant improvements in these, Malaysia will remain in the middle-income trap.

Comparative Study of Risks in Indian Banks: An Empirical Analysis Using Bank-Dependent Factors and Economic Indicators

The global financial meltdown caused by the sub-prime mortgage crisis of the USA in 2007-2008 and its consequent negative effects on the structure of the financial markets all over the world resulted in a crisis related to the management of capital. The study focuses on the Indian banking sector, and more specifically, on the factors affecting the efficiency of risk management practices in the Indian banks in light of the Basel III provisions. The objective of the study is to analyse the main components and quality of bank assets in India and subsequently identify the effect of risk-taking on banks, economic cycle fluctuations and risk management. Empirical analysis is conducted using panel regression techniques by taking a combination of time series and cross-sectional data of various bank-specific and macroeconomic factors. Capital adequacy is used as a proxy to measure the solvency level of the banks forced by capital depletion as the dependent variable and is measured by dividing regulatory capital with total risk-weighted asset. Macroeconomic indicator economic growth and inflation are found to be significant while capital adequacy of Indian banks is found to be positively associated with credit risk.

The Global Competitiveness Index: A Comparative Analysis between Turkey and G8 Nations

The Basel Committee on Banking Supervision (i.e. Basel I, II & III), the International Monetary Fund and the World Bank (i.e. Financial Sector Assessment Program), the World Trade Organization, the Bank for International Settlements, the US Federal Reserve, the European Central Bank, the European Banking Authority (EBA), Committee of European Banking Supervisors (CEBS), the Financial Services Authority of the UK, the Bank of Japan, the supervisory community and regulators (i.e. domestic and international), practitioners, and bank executives gravely failed to strengthen the global financial stability. On the contrary, financial authorities in many of the advance nations (particularly, the Fed’s expansive policies and the ECB’s reluctance to admit its blindness to the severity of risks that caused near global financial meltdown in 2008) have directly or indirectly contributed to global financial instability. The Global Competitive Index through its twelve pillars is a more complete measurement of financial stability in each country and globally. Analyses throughout this study compared Turkey’s competitiveness rankings with those of the G8 countries. The results show that Turkey’s mean overall ranking is significantly higher than that of Canada, France, Germany, Japan, and the UK; the difference in means was statistically significant. However, even though Turkey’s mean overall ranking was slightly higher than that of Italy, and lower than that of the Russian Federation, nevertheless the difference in means was not statistically significant.

A Comparative Study of India and Brics Nations’ Public Health Care with A special reference to India’s Position

Public health care is an important public good in a modern society. At the domestic extent, it has been development in the commitment of the BRICS nations as Brazil, Russia, India, China and South Africa to rise up public health care financing. In the international level, it is observed by the global community progress on the three health-related Millennium Development Goals. In spite of successes in curbing infectious diseases and curtailing CMR and MMR, old risks continues and new challenges emerge, coming post the 2008 global financial meltdown, the present slower economic growth and increasing economic inequality. The BRICS nations see these obstacles and have started cooperation on public health delivery.