Referee Report On Economic Globalization, Financial Development And Financial Crises

The recent financial crisis has a huge impact on systemic Important Financial Institutions; it’s distressing effect can be felt in almost every business area and process of a bank. A fairly large literature investigates the impact of financial crisis on large, complex and interconnected banks. The great recession did affect banks in different ways, depending on the funding capability of each bank. Kapan and Minoiu (2013) find that banks that were ex ante more dependent on market funding and had lower structural liquidity reduced supply of credit more than other banks during crisis. The ability of banks to generate interest income during the financial crisis was hampered because there was a vast reduction in bank lending to individuals and

Contradiction of Finance Capitalism, by Richard Peet, critiques global finance capitalism within this context. Peet states that “we now life in the era of global finance capitalism”, which suggests that whether we like it or not, the society we live in is capitalist so we might as well cope with it (Peet, p.1). Peet argues that it has overcome every part of the system, which has made it so hard to avoid. He said the finance capital is made up of “concentration and centralization of capital in large corporations, cartels, trusts, and banks” (Peet, p.1). Peet also refers to David Harvey who “has argued that ownership and management of capitalist enterprises have fused together, as upper management” (Peet, p.1). They argue that it is these capitalist entities control what happens with development. In other words, corporations have enough power that they now control states’ markets and what they invest in. Additionally, Peet discusses Randy Martin’s “the financialization of everything” to explain that finance has grown to be politically powerful, too (Peet, p.1). Corporations have been able to create monopolies and thus become hegemonies. They have realized that economic power creates political power. These government institutions are the “capitalist class” who claim to work on “democratization” and “equalization”

The last decade has been a period of much economic reform for individuals, institutions and societies alike. With increasing rates of globalization, financial markets and foreign trade have been a direct beneficiary of the free market, thus resulting in an interlinked and a rather interdependent global economy. Despite this advantage, the opportunity for failure loomed as human error and ill-conceived economic regulations became more frequent in some of the world 's most sophisticated economies. This loophole in the global economy resulted in the greatest economic downfall of the modern era since the Great Depression of the 1930’s, the 2008 Global Financial Crisis (GFC). Foster (2010, p.54) defines the financial collapse as a “crisis that started in the US mortgage market when massive numbers of mortgage defaults threatened the ability of the United States and global financial institutions to service their debts. Their consequent inability to lend led to a recession in the United States and many other countries, and increased the likelihood of a meltdown of the global financial system”. Despite the rarity of financial crises, they are considered cyclical, mirroring the trends of a business cycle, thus are able to reoccur if wrong financial regulations are implemented and lack of control is exercised on economic activity. As many economists today examine the crisis, it is widely concluded that there were collective causes and effects, both immediate and longstanding, of the

Title I sets a closer look and evaluation of domestics and international financial institutions to achieve better control over the financial stability and finding better and more efficient ways to overlook the of the country finding more efficient ways. Monitor.

USA’s financialization is driving up commodity prices and generating economic instability. Combine this with the other two major structural imbalances of the inherently flawed single currency system in Europe plus the imbalance in the global economy with china’s flawed economic policy, are creating a environment and economies that are destine for turmoil and disequilibrium.

One cannot say that U.S banking system is designed to fail; however, it is the relentless deregulation in the financial sector and competing for financial sector activities in the globalized financial market as means towards higher growth resulted in its instability over the centuries. The U.S. central bank and federal government did not see the impending crisis on the horizon due to the deregulation of financial market. The central bank believed that there could be evolving economic imbalances or risk in the financial markets, but that these were best managed by market forces themselves. But they failed to realize that some time market fails on its own. Deregulation of the financial sector was initiated and reinforced through legislative changes, followed by regulatory policies consistent with the philosophy of deregulation. As the US was losing comparative advantage in agriculture, manufacturing, and services to developing and emerging market economies, while they continued to have advantage in the financial sector. Hence, the United States perhaps felt that national interest lies in their dominating financial sector activity, and hence development of the financial sector was coterminous with their national interest. This approach could have led to a race to the bottom in financial sector regulation in their jurisdiction. The US banking system and financial sector was source of so much instability was due to relentless deregulation of the financial market.

There have been few financial crises in the United States. The Global Financial Crisis of 2008 to 2009 was the most recent and before that was The Great Depression of the 1930s. The Global Financial Crisis actually began in 2007 when prices of homes tanked. It not only affected the U.S. but it also affected economies overseas. The entire investment banking industry, some of the biggest insurance companies, enterprises government used for mortgage lending, top mortgage lenders, the largest savings and loan companies, and two of the largest commercial banks were many of the financial sectors affected by the crisis. “Banks stopped making loans, share prices plunged throughout the world and most of the world plummeted into a recession” (The Financial Crisis of 2008: Year In Review 2008,” 2009, para. 1).

The crises showed just how interconnected the banking system is throughout the world. The Lehman Brothers bank closure in 2008 created a major financial crisis around the world due to its influence (The Economist, 2013). It took the government’s massive bail outs to prevent total collapse of the financial system and to some extent economic collapse of the country. This government action set a precedent and to some sent a message that the reckless action by the banks in the name of profit is fine because they now have a safety net. It is a good example of how the collapse of a big financial institution that has national and global influence can affect several interrelated firms to the detriment of the country’s economic interests. This paper therefore, examines the notion “too big to fail” in relation to banking.

The Global Financial Crisis, also known as The Great Recession, broke out in the United States of America in the middle of 2007 and continued on until 2008. There were many factors that contributed to the cause of The Global Financial Crisis and many effects that emerged, because the impact it had on the financial system. The Global Financial Crisis started because of house market crash in 2007. There were many factors that contributed to the housing market crash in 2007. These factors included: subprime mortgages, the housing bubble, and government policies and regulations. The factors were a result of poor financial investments and high risk gambling, which slumped down interest rates and price of many assets. Government policies and regulations were made in order to attempt to solve the crises that emerged; instead these government policies backfired and escalated the problem even further.

According to many experts, this was one of the most severe financial crises in our history since 1930. This crisis was so complex that was known throughout the world under many names, such as “the Great Recession”, “the financial crash of 2008”, “the Trouble Asset Relief Program bailout”, and “the Great Panic” (Biegelman & Bartow, 2012). Whatever its name, this crisis undoubtedly disorder the world of finance dramatically. This financial chaos, now turned into a recession, had the misfortune to expand and affect many organizations around the planet. Everyone was affected in some way or another; it was like a domino effect that apparently nobody saw it coming, and could not be stopped in time. Unfortunately many people lost their jobs due to the meltdown; million of people were subject to wage cuts, and many companies had to go out of business, because they just not endure the tremendous pressure on its shoulders.

Financial Instability The soaring volume of international finance and increased interdependence in recent decades has increased concerns about volatility and threats of a financial crisis. This has led many to investigate and analyze the origins, transmission, effects and policies aimed to impede financial instability. This paper argues that financial liberalization and speculation are the most reflective explanations for instability in financial markets and that financial instability is likely to be transmitted globally with far reaching implications on real sector performance. I conclude the paper with the argument that a global transaction tax would be the most effective policy to curb financial instability and that other proposed

The government in most developing countries intervened to provide more socially-optimal levels of capital, synchronized with government development planes, and to provide finance for government budget deficits through domestic financial markets (Alam,1989;Amsden,1989; Bradford,1986,1987;Cho and Kin 1991; johnson,1985; and Lee,1992).The financial regulations were designed and implemented to restrain market forces in the allocation of resources , to encourage economic growth ,ensure financial stability and achieve other national goals.

In the paper, the authors develop an interest group theory which explains why some countries develop their financial system and why others don’t. The theory emphasized that the political and social forces of financial development are important variables in the role of financial development as the power of incumbents can greatly influence the progression of

There are great differences and inequality between countries around the world. Many countries don’t have access to basic needs such as education, health care, law and order, safety why is that? Why is there a gap between rich and poor? How did some countries manage to become rich while others remained poor? These are the regularly asked questions about the development of countries. There are different perspectives on the growth of countries; however the three main theories mentioned in the book are due to geography, culture, ignorance or institutions. The authors of “Why nations fail “Acemoglu and Robhinson have challenged these theories . They believe that political institutions are the main factors for development of a well-functioning nation and the determinants of economic institutions. "It's all about institutions," Daron Acemoglu, one of the authors, explained. "It's really about human-made systems, rules, regulations, formal or informal that creates different incentives."

In our society, we are dealing with conflicts that affect us greatly. Most of these conflicts are involved with wars, politics, and financial issues. We usually learn from these problems and make sure they don’t get happen again. Maintaining the peace is an important element for us to become a better person. Even though, we might have encountered many issues, Europe is the one country that is still having a major crisis. Many of the refugees are attempting to gain freedom from their suffering of war. The only problem is that many of them are struggling to reach the European borders. The reason is because transportations are limited, and it is hard to attain. The Europe, migrant crisis has been occurring for a while, as it has an impact on