Financial Crises - Science topic

In recent years, the scale of the occurrence of serious economic and financial crises in some regions of the world and/or on a global scale has been intensifying. The scale of the appearance of certain types of economic, financial, energy, etc. crises has been increasing since the 1970s. The abolition of gold parity for the U.S. dollar, oil crises, deregulation and liberalization of the functioning of financial markets, increasing the active role of central banks in shaping monetary policies with the possibility of adding money injected into the economy through direct purchase of treasury bonds by the central bank, abolishing some of the previously introduced systemic prudential instruments used in credit risk management, increasing the scale of international operations of investment banks and investment funds making speculative transactions in foreign capital markets are just some of the sources of the increase in the scale and frequency of financial and economic crises since the 1970s. Some types of the aforementioned crises have appeared with increasing frequency and magnitude in the current 21st century. The day on September 15, 2008, when the world's fourth-largest investment bank Lehman Brothers went bankrupt was considered the beginning of the global financial crisis. This crisis was generated by, among other things, erroneously conducted overly lax monetary policies that were supposed to favor financial markets even when assets were overvalued in capital markets, overly liberalized credit policies in mortgage lending, disregarding safety standards in credit risk management and practicing moral gambling in investment banking, and so on. In 2020, there was a pandemic economic crisis, which initially developed through the Covid-19 pandemic to then be exacerbated by large-scale lockdowns imposed in some countries on economic entities operating in selected, certain industries, mainly service sectors of the economy, and the introduction of so-called national quarantines. In some countries, where, such as Poland, the development of the cheapest renewable energy sources was blocked and slowed down in 2022, when the price of fossil fuels rose strongly, a deep energy crisis occurred. Beginning in 2021, inflation began to rise rapidly in many countries, generated by pumping large amounts of printed money into the economies, whose task was to mitigate the scale of the recession generated by the lockdowns and national quarantines introduced repeatedly during the Covid-19 pandemic. In order to limit the growth of inflation, which, as in Poland, rose to double-digit levels, the central bank raised interest rates. The effect of such anti-inflationary measures was to reduce liquidity in the financial sector, increase the cost of borrowed money, make credit more expensive and reduce the scale of investment in many sectors of the economy. The result was a recession of the economy, which in many countries appeared in the 1st half of 2023. In view of the above, the misapplied measures of monetary and/or fiscal policy eased too much led to the generation of a financial and/or economic crisis. Subsequently, the anti-crisis instruments applied more than once led to the generation of another economic crisis. In addition, a climate and environmental crisis is also developing in the long term as a result of continued high greenhouse gas emissions, ignoring issues of protecting the planet's climate, biosphere and biodiversity, slowing down the development of renewable energy sources and implementing the green transformation plan for the economy on a limited scale. In view of the above, some crises like the pandemic economic crisis of 2020, among others, were generated by new factors like the Covid-19 pandemic, which could later be referred to as so-called “black swans” due to their uniqueness, atypicality and unexpected appearance by no one. On the other hand, the key root factors of some economic and financial crises include misguided state interventionism, errors in forecasting and analysis of the macroeconomic situation, misapplied pro-growth and/or anti-crisis instruments within the framework of certain economic, fiscal, budgetary, sectoral and monetary policies pursued by the government and conducted by the central bank. In view of the above, it is probably not possible to conduct economic, monetary, etc. policies without making mistakes. It is not possible to forecast all, future impact factors, determinants shaping the macroeconomic situation and potentially all events that may lead to further economic and/or financial crises in the future. However, it is possible to learn from past mistakes, and given this knowledge, a more sustainable, secure economy can be built, processes and instruments for managing credit risk and other categories of risk can be continuously improved, financial markets, including capital markets, commodity markets, securities markets can be systemically strengthened through prudent use of prudential instruments, not ignoring the principles of financial security, not practicing moral gambling in investment banking, and so on. Perhaps in the future, the next financial and economic crises that will occur will be the result of, on the one hand, still not adequately refined systemic prudential instruments, institutional financial security arrangements, credit risk management instruments, etc., and new factors and events that are difficult to forecast, which can probably later be called the next black swans. however, there are crises that we know will worsen in the future and/or will be the source of the occurrence of increasingly serious negative effects on the economy and humans. this kind of long-term crisis already in operation is the ever-developing and worsening climate crisis and, at the same time, the environmental crisis, which is associated with the process of rapid loss of biodiversity of the planet's natural ecosystems.

The key issues of the impact of the Covid-19 pandemic on the economy and financial markets are described in my article below:

IMPACT OF THE CORONAVIRUS PANDEMIC (COVID-19) ON FINANCIAL MARKETS AND THE ECONOMY

IMPACT OF THE SARS-COV-2 CORONAVIRUS PANDEMIC (COVID-19) ON GLOBALIZATION PROCESSES

The key issues of the problematic sources of Poland's exceptionally deep energy cross in 2022 are described in my co-authored article below:

POLAND'S 2022 ENERGY CRISIS AS A RESULT OF THE WAR IN UKRAINE AND YEARS OF NEGLECT TO CARRY OUT A GREEN TRANSFORMATION OF THE ENERGY SECTOR

Zarzadzanie kryzysowe w przedsiebiorstwie opisałem w artykule:

CRISES IN THE ENVIRONMENT OF BUSINESS ENTITIES AND CRISIS MANAGEMENT

I described the key issues of opportunities and threats to the development of artificial intelligence technology in my article below:

Anti-crisis state intervention and created in media images of global financial crisis

In view of the above, I address the following question to the esteemed community of scientists and researchers:

What do you think about this topic?

What is your opinion on this issue?

Please answer,

I invite everyone to join the discussion,

Thank you very much,

Best wishes,

Dariusz Prokopowicz

I came to know that Hank (Heterogeneous Agents New Keynesian) models are now in fashion. I skipped two papers on Hank. Those economists who work in Hank boast that this and that that were impossible in Rank (Representative Agent New Keynesian) models became possible. They may be right with this regards.

I have a question. What are the problems that are common to Hank and Rank models?

For example, Rank and Hank both assume the validity of central bank interest rate policy. In the case of Japanese economy, it was not very effective for about 30 years. The very validity of interest rate policy is questioned. Then, I want to know if there are good empirical works that estimated the dimension of peoples’ reaction (in the economy as a whole) to the change of interest rate, especially when the interest rate is very low (or nearly zero).

During the recent economic and financial crises in many countries in the framework of anti-crisis measures and stimulating the rate of economic growth, in the framework of the monetary policy pursued, the formation of the money supply, the change of interest rates formally and/or informally cooperate with the government, which also in the framework of the anti-crisis programs undertaken, instruments for the activation of economic activity of companies and enterprises, the activation of consumption and investment carries out fiscal, social, budgetary, housing, etc. policies. If coordinated mild fiscal policy and mild monetary policy are appropriately synergistically applied within the framework of interventionist anti-crisis and pro-development measures, then stimulating the economic activity of firms and enterprises, stimulating consumption and investment development, reducing the development of the economic crisis can work more effectively. However, the scale of the applied anti-crisis and pro-development measures should be precisely adjusted to the sectoral and industry structure of the economy and the specifics of the macroeconomic processes being implemented, and thus should not lead to a significant and sustained increase in the indebtedness of the state's public finance system, too high a level of creditization of economic processes, too high levels of acceptable credit risk by commercial banks, a strong increase in inflation, a decline in the value of the national currency, a decline in the interest of foreign financial institutions in securities issued by the state treasury and capital companies of the country, etc. Unfortunately, during the SARS-CoV-2 (Covid-19) coronavirus pandemic, first the government in Poland applied anti-pandemic, interventionist measures, including lockdowns imposed on selected sectors of the economy thus causing a deep recession of the economy and then through further interventionist measures highly costly for the state's public finance system, financial subsidies coming from the state's public finance system limited the growth of unemployment. Another negative effect of the applied interventionist measures of the government was the rapid increase in inflation, which began as early as the 2nd quarter of 2021. This was an example of erroneously applied interventionist actions of the government on too large a scale, actions involving the application of selected instruments of state interventionism, instruments of synergistically conducted extremely mild both monetary and fiscal policies, which, as a consequence of their synergistic application, negatively affected the economic processes taking place in the Polish economy. On the other hand, some of the interventionist instruments used, due to the specially created mechanism of their operation and their high scale, may have violated the norms set forth in the Basic Law, i.e. the Constitution of the Republic of Poland. This type of interventionist measure applied on an exceptionally large scale in Poland was the purchase of Treasury bonds by the National Bank of Poland to generate additional, printed money, which was then introduced extra-budgetarily into the economy mainly in the form of non-refundable financial subsidies transferred to many companies and enterprises operating in various sectors of the economy in order to limit the growth of unemployment in a situation of deep economic crisis and economic recession generated by lockdowns. However, the government's main concern was that the unemployment rates shown by the Central Statistical Office did not change significantly despite the real decline in the level of employment, entrepreneurs changing the terms and conditions of employment of employees by, for example, reducing the duration and scale of employment of the same employees, a decline in the economic activity of companies and enterprises, a reduction in the scale of activities carried out by business entities, a reduction in the development opportunities of business entities affected by lockdowns, etc. The state interventionism thus applied during the pandemic consisted of actions and instruments of an also informally coordinated, politically politically ultra-mild monetary policy through an interventionist reduction of interest rates by the central bank and an ultra-mild fiscal policy based on the application of historically large-scale financial, non-refundable state aid. Synergistically and in a coordinated manner, the aforementioned mild monetary policy and fiscal policy applied effectively first limited the development of the economic crisis to then generate further economic problems in the economy. It is estimated that in Poland, since the 1st wave of the coronavirus pandemic, the central bank has created and transferred money to the government with a total value of almost 400 billion zlotys. On the other hand, in the framework of the economic policy unjustifiably described in the media by the government as an economic policy pursuing sustainable economic development, the opportunities that arose during the pandemic have not been used to accelerate the processes of green transformation of the economy, and this despite the fact that opportunities for this have arisen.

In view of the above, I address the following question to the esteemed community of scientists and researchers:

And what is your opinion on this topic?

What is your opinion on this issue?

Please answer,

I invite everyone to join the discussion,

Thank you very much,

Best wishes,

Dariusz Prokopowicz

Dear researchers,

We all agree that during financial crises, bank may diversify their income channels to encounter potential risks. My concern is whether diversification is the only choice for banks to survive during such economically sensitive periods?

Many thanks with love.

Roman!

It has happened on more than one occasion that attempts to significantly increase the scale of "manual control" of the economy, economic state interventionism, expansion of public sectors, the system of central institutions, government-controlled public institutions and enterprises operating as state-owned companies, etc., have ended in the occurrence of another economic and/or financial crisis, larger than the previous ones. Economic crises, including raw material crises, were more than once initiated by the unexpected occurrence of certain external factors such as a sudden and rapid increase in the price of raw materials and/or also other production factors. This happened during the raw material crises of the 1970s. The government, in the situation of the development of a raw material crisis, in an attempt to limit the scale of this crisis and the scale of the also developing economic crisis, the increasing level of unemployment and the decrease in economic activity of companies and enterprises, changes its economic policy by introducing certain additional, interventionist, anti-crisis solutions and instruments of fiscal, monetary policy, etc.

The scale of the state's influence in the economy has been growing in Poland in recent years. An increase in the scale of the so-called anti-crisis economic state interventionism; an increase in the scale of the introduction by the government into the economy of additional money not bound by the parity of produced economic goods as an element of interventionist shaping of economic processes; an increase in the scale of the participation of the state treasury in the shareholding of companies and enterprises of some, including strategic sectors of the economy; an increase in the scale of monopolisation of markets by sectors in which corporations dominated by the state treasury operate; the creation by people working in the government of new institutions, agencies, foundations, institutes, etc., which pursue the combined interests of decision-makers, political parties and sometimes also informally linked to business. pursuing the combined interests of decision-makers with the objectives of political party functioning and sometimes also informally linked to business; the increasing scale of the use of central banking monetary policy instruments and fiscal policy instruments in government economic programmes pursuing specific objectives in the increased scale of state influence in economic processes; the increasing scale of the state's system of public finances in the context of the overall finances realised in the economy; the increasing scale of indebtedness of the state's system of public finances without an analogous scale of the increase in investments realised within the framework of the public and commercial sectors of the economy are only some of the key aspects of the increase in the scale of economic state interventionism that has taken place in recent years.

In view of the above, I address the following question to the esteemed community of scientists and researchers:

And what is your opinion on this?

What is your opinion on this subject?

Please respond,

I invite you all to discuss,

Thank you very much,

Best wishes,

Dariusz Prokopowicz

On Monday 13.03.2023, the situation shaping the capital markets was influenced by the developing news in many media that one of the largest banks in the USA, i.e. Silicon Valley Bank, had declared bankruptcy. The collapsed SVB bank was taken over by the state-owned Federal Deposit Insurance Corporation (FDIC, Federal Deposit Guarantee Corporation) on Friday 10.03.2023 after the bank was unable to pay out money to customers withdrawing their deposits in a panic. SVB is the 16th largest bank in the US and has served a significant proportion of Silicon Valley startups, companies and funds. Silicon Valley Bank was the largest collapse in the banking sector since the 2008 Lehman Brothers collapse and the onset of the 2007-2009 global financial crisis. At the end of 2022, SVB had more than $209 billion in assets. But the collapse of Silicon Valley Bank (SVB) is not the end of the problems in the financial markets. On Monday 13.03.2023, news hit the media that another bank is failing. Customers worried about their deposits also called many of their other banks to check that their money was safe. This second spectacular failure in the financial system is New York's Signature Bank, which was shut down by state market regulators on Sunday. According to the Reuters news agency, this is the third largest bank failure in US history. It is also another spectacular bankruptcy of a major financial institution overseas in just a few days. New York-based Signature Bank is a US financial institution that, at the end of 2022, had customer deposits worth almost USD 89 billion and USD 110.36 billion in assets. According to published official figures, almost a quarter of these funds came from cryptocurrencies. This raises a key issue to be resolved regarding the extent to which credit procedures and the credit risk management process at financial institutions have improved over the last 15 years, i.e. after the onset of the 2007-2009 global financial crisis. I have described the determinants and root factors of the 2007-2009 global financial crisis, including the mistakes made in credit risk management, in my articles on this issue, which I posted on my profile of this Research Gate portal after publication. I would like to invite those conducting research on this issue to join me in research collaboration on issues and factors for improving the credit risk management process in financial institutions.

In view of the above, I would like to address the following questions to the esteemed community of scholars and researchers:

What do you think about this topic?

What is your opinion on this subject?

Please respond,

I invite you all to discuss,

Thank you very much,

Warm regards,

Dariusz Prokopowicz

In recent years, on the one hand, unethical business practices and practices incompatible with corporate social responsibility have continued to occur in the intermediation of financial, investment transactions concluded on the capital markets. On the other hand, there are also still situations confirming the thesis that the institutions of financial, banking and capital markets supervision, including stock exchanges, investment funds, brokerage houses and offices, insurance companies, etc., to a limited and incomplete extent reduce the scale of unethical business practices on the capital markets. Could this be a symptom of the impending next global financial crisis? The progressive deregulation and liberalisation of the rules of financial markets since the 1970s, including capital markets, stock exchanges, has generated an increase in risks in these markets and enabled unethical business practices in commercial banks, investment banks, brokerage houses and so on. In addition to this, the increasing scale of the use of insider trading in the context of financial transactions, speculative investments made using securities listed on stock exchanges and other assets, the objects of transactions in the capital markets has increased the scale of the volatility of these markets. The use of unethical business practices in investment banks, brokerage firms, credit advisors in commercial banks providing mortgages ... reduced vigilance in detecting such practices in financial supervisory institutions became some of the key factors in generating the global financial crisis of 2007-2008. Applied short positions to monetise declines in equity valuations, stock indices and other capital market assets. The above-mentioned practices, as well as unreliable credit advice, the granting of mortgages to uncreditworthy individuals and entities, the sale by brokers employed by investment banks of securities highly rated by the banks' cooperating rating agencies, which later turned out to be worthless securities, are important factors that generated the global financial crisis of 2007-2008. Of course, the key underlying factors that generated the global financial crisis of 2007-2008 are not only issues related to financial sector entities serving retail customers, not only to commercially operating financial institutions, investment banks, etc., but also to the financial system. The key factors that generated the global financial crisis 2007-2008 also include systemic factors, i.e. the above-mentioned deregulation and liberalisation of financial markets, the abolition of prudential instruments that were introduced after the Great Depression of the 1930s in order to make the financial system safer and to increase the scale of stability in the functioning of the economy. In addition, just before the global financial crisis of 2007-2008, the central bank pursued an excessively lax monetary policy and an additional governmental institutional guarantee system was created against financial transactions carried out in commercial and investment banks, which were undertaken with the acceptance of ever higher levels of credit risk, ever higher levels of leverage, ever lower levels of collateral for the transactions carried out, etc. In recent years, new financial markets have been developing, such as cryptocurrency markets. In addition to this, there have been situations in which the economic situation on specific capital markets, stock exchanges and cryptocurrency platforms has been influenced by posts and comments made by persons recognised by the media, who are also active on social media platforms, including Twitter tweets, which may have influenced the mood and investment decisions of many social media users and, at the same time, individual investors active on capital markets. On the other hand, there have been many instances of insider trading in capital market transactions. In order for financial markets, including capital markets to operate efficiently and effectively, financial, banking and capital markets supervisory institutions, including stock exchanges, investment funds, brokerage houses and offices, insurance companies, etc., should effectively detect such economic crimes, dishonest actions of some capital markets participants, non-compliance with the applicable legal norms, application of unethical business practices detect and reduce their scale. Financial supervisory institutions should reduce the scale of unethical business practices on capital markets. When financial supervisory institutions function efficiently, financial markets function effectively and financial crises occur less frequently.

In view of the above, I would like to address the following question to the esteemed community of scientists and researchers:

What do you think about this topic?

What is your opinion on this subject?

Please answer with reasons,

I invite you all to discuss,

Thank you very much,

Best wishes,

Dariusz Prokopowicz

In the past, already since the commodity crises of the 1970s, the period of the beginning of the development of various new types of derivatives, the increase in the scale of deregulation and liberalization of the operation of financial markets, the change of international monetary systems through the replacement of the Bretton Woods system with free exchange rate systems, the scale of instability in financial markets, including capital markets, currency markets, stock exchanges has increased significantly. During the global financial crisis of 2007-2009, data emerged confirming the facts of speculative activities by some investment banks, which increased the scale of development of the aforementioned crisis. Also, at the beginning of March 2020, when the World Health Organization declared the state of the global epidemic, i.e. the so-called SARS-CoV-2 (Covid-19) coronavirus pandemic, this fact also triggered a strong increase in the volatility of asset valuations in the capital markets. When new events suddenly appear that generate uncertainty, fear then financial risks, credit risks, currency risks, liquidity risks, debt risks, etc.increase, which causes an increase in volatility in financial markets. Institutions that take advantage of this kind of situation, institutions that have sensitive information, use this kind of information and, on the basis of this information, carry out insider trading in certain capital markets are an example of imperfect functioning of financial markets. Such instances of imperfect functioning of financial markets, including capital markets, should be detected and limited by institutions established for this purpose, such as the Securities Commission, the Financial Supervision Commission, the Banking Supervision Commission, etc. The functioning of financial markets should be improved, and the rules, standards and procedures of individual institutions and segments of financial markets should be perfected. When it is the so-called small, small stock market investors then it is assumed that this is a positive factor in ensuring a certain level of liquidity in the capital market. However, when transactions are carried out by large financial institutions, including banks and investment funds with the involvement of large financial resources in an amount, for example, comparable to the value of the state budget of a small country, then there are quandaries about the possibility of deliberate not only exploitation of situations of instability in financial markets, but also about possible actions that amplify or even inspire these instabilities. For example, military actions and failures of critical infrastructure installations, high-risk system infrastructure, energy sector infrastructure can be factors that cause a significant increase in asset price volatility in capital markets, including energy commodity prices on commodity exchanges and securities prices on stock exchanges. A recent example would be failures, perhaps sabotage actions carried out on pipelines filled with natural gas causes destabilization in energy commodity price markets. This causes the currencies of small economies, i.e. Poland, for example, to fall. In addition, a significant increase in interest rates on the currencies of large economies like the US and the EU increases the scale of the decline in the currency of a small, developing economy and one that is highly exposed to the energy crisis. In addition, the war in Ukraine is taking place next to Poland. In addition, large, internationally operating investment banks can take advantage of this situation to conduct profitable speculative transactions using currencies characterized by a high level of exchange rate volatility and susceptibility to certain defined influencing factors. A decline in the exchange rate of the Polish national currency PLN will cause additional difficulties in the central bank's anti-inflationary, interventionist monetary policy. The topic of the need to improve the issues of the functioning of financial markets, including the improvement of the rules, standards and procedures for the operation of individual institutions and segments of financial markets is still relevant.

In view of the above, I address the following question to the esteemed community of researchers and scientists:

What are your thoughts on this topic?

What is your opinion on this issue?

Please answer,

I invite everyone to join the discussion,

Thank you very much,

Warm regards,

Dariusz Prokopowicz

Since the commodity crisis of the 1970s, financial markets have been deregulated in many respects. The Bretton Woods international monetary system based on USD dollar parity collapsed (gold parity for the USD dollar was abolished). In the 1990s, many issues of the operation of deposit-credit commercial banks and investment banks were deregulated again.

It was made possible for the two types of banking to merge. This had its effects in generating the global financial crisis of 2007-2009. Due to the deregulation of financial markets, systemic credit risk increased significantly. The importance of improving the credit risk management process implemented in financial institutions, including commercial and investment banks, also increased. In many countries, the practice of money printing without coverage of manufactured products was practised, leading to increased inflation and, in some countries, to the occurrence of hyperinflation. Too low interest rates and government guarantees and other elements of a soft monetary policy led to too cheap money, too high a level of credit for economic activity and too high a level of credit risk, a decline in the repayment of bank loans and, as a consequence, to financial, economic and debt crises, etc. Derivatives specifically generated for this purpose, including credit derivatives such as subprime bonds, CDOs, etc., sold by investment banks to successive investors to generate additional money for unreliably (with practically no credit checks) granted mortgages, led to the major global financial crisis of 2008 in 2007-2009. I have been researching this issue. I have included the conclusions of my research in articles which, when published, I posted on my profile of this Research Gate portal. I invite research collaboration. I would like to hear your views on this issue.

In view of the above, the following question is topical:

What do you think about this topic?

Please reply,

I invite you all to discuss,

Thank you very much,

Greetings,

Dariusz Prokopowicz

It is interesting to note that there are analogies between economy and a thermodynamic framework. I have only begun to delve into this inter-connection. It looks like the thermodynamic analogy has not served very far. I have visited some lectures by Prof. Steve Keen. He emphasizes the importance of energy conversion in producing surplus in an economy. Labor and Capital are only means to achieve work from given resources. He is also of the view that macroeconomics can be formulated without any microscopic foundations. So that sounds thermodynamic, as a self-consistent framework, although we have a statistical foundations for thermodynamics. But also I am wondering if financial crises may be described as sort of phase transitions. And how to describe a stable economy as a steady state system? Any opinions or suggestions for interesting ideas, or the state of research in this direction, are welcome.

Is the independence of the central bank from the government full and real now? What is your opinion about the central bank's independence from the government?

Is it full and real independence? Should there be full independence or only on some issues?

Or maybe the central bank should run a fully coordinated, parallel cooperation with the government regarding the common economic policy?

Should the monetary policy of the central bank be coordinated with the government's budget policy and to what extent? How is it in your country now?

How do you assess the issue of cooperation between the central bank and the government?

Should the central bank be used by the government to conduct a specific interventionist, anti-crisis economic policy?

The key issues of central banking, including the role of central banks in the banking and financial systems of modern countries, the anti-crisis instruments of soft monetary policy used by central banks, the synergistic actions of central banks using the example of the FED, ECB and NBP are described in the following publication:

And what is your opinion about it?

What is your opinion on this topic?

Please feel free to respond,

I invite you all to join the discussion,

Thank you very much,

Best regards,

I would like to invite you to join me in scientific cooperation,

Dariusz Prokopowicz

What kind of scientific research dominate in the field of Improving credit risk management?

Please, provide your suggestions for a question, problem or research thesis in the issues: Improving credit risk management.

Please reply.

I invite you to the discussion

Thank you very much

Best wishes

Already at least several commercial banks have created their own cryptocurrencies. Some investment funds invest part of their assets in selected cryptocurrencies. Recently, the investment bank JP Morgan has created its own cryptocurrency JPM Coin. Cryptocurrency JPM Coin will be used to settle initially a small part of the transaction, which JP Morgan performs on a daily basis for a total of about USD 6 billion.

Thanks to JPM Coin, settlements between business partners should take place immediately, ie much faster than the current standards of transfers. However, apart from accelerating the time of the transaction, what are the other goals for banks to introduce their own cryptocurrencies?

Could investment banks create a new type of collateral for transactions in the event of a possible strong loss of the USD dollar in the event of another global financial crisis connected with the currency crisis? Such a risk exists if the problem of growing public debt in the US is not resolved and banks in China cease to buy US Treasury bonds.

Do you agree with my opinion on this matter?

In view of the above, I am asking you the following question:

Please reply

I invite you to the discussion

Thank you very much

Best wishes

Dear Researchers, Academics, Friends,

When the global financial crisis began in the autumn of 2008, the central banks of some countries, primarily the Federal Reserve Bank in the USA and the European Central Bank in the European Union, undertook specific anti-crisis measures to reduce the negative effects of the financial crisis at the time.

In view of the above, how do you assess the role of central banking in the area of anti-crisis measures in the event of financial and currency crises?

Particularly important issues of central banking, including the role of central banks in the banking and financial systems of modern countries, the anti-crisis instruments of soft monetary policy used by central banks, the synergistic actions of central banks using the example of the FED, ECB and NBP, the mistakes made by central banks and the factors generating the escalation of financial crises, I described in the following publication:

And what is your opinion about it?

What is your opinion on this topic?

Please feel free to respond,

I invite you all to join the discussion,

Thank you very much,

Regards,

I would like to invite you to join me in scientific cooperation,

Dariusz Prokopowicz

In the second half of the twentieth century, new neoclassical trends dominated in the history of economic thought, partly referring to the foundations of classical economics.

However, at the end of the twentieth century and in recent years, various concepts that complement or partly undermine certain assumptions of neoclassical economics are developing dynamically.

These are primarily theories based on conducted studies on behavioral consumer behavior in consumer goods markets, investors and shareholders in the capital markets, entrepreneurs in the markets of capital goods, etc.

These various theories supported by the results of research are in the mainstream of behavioral economics.

However, despite the ongoing development of behavioral economics, neoclassical economics still dominates in academic textbooks dedicated to students of economics.

Neoclassical economics is based on the fundamental assumption that people make rational economic decisions.

Advocates of the neoclassical economics suggest that the theory of neoclassical economics correlates with the key assumptions of psychology regarding rational human behavior.

I agree with this correlation that irrational decisions only apply to situations in which people feel very strong emotions of both negative nature, such as anger, hostility, hatred or positive emotions associated with feeling of love, friendship or belonging to a given social group.

On the other hand, economic decisions are always made rationally according to classical and neoclassical economics.

However, in recent years, on the basis of the development of behavioral economics, there are more and more data and results of research carried out, that unfortunately there are many examples suggesting the irrationality of some economic decisions.

Often, consumers make unnecessary purchases based on an efficiently carried out advertising campaign for products or services.

Perhaps consumers are more and more often susceptible to the impact of effective advertising campaigns, in addition to traditional media, also in new online media, including on social media portals, where viral marketing is widely used.

Often in advertising campaigns, specific products and services are presented as unique, innovative or having such features as opposed to the substitutional offer of competition.

The message that is not always formulated in the advertising campaign is truthful, but some consumers may receive such a message as objective and this translates into an increase in the sale of a specific, effectively advertised assortment.

In addition, there are price promotional campaigns in large-format stores, which also stimulate consumer interest, increase sales.

Pricing promotional campaigns often also increase the purchase of unnecessary goods for consumers or proverbial buying.

A negative aspect of such buying is the subsequent discomfort of spending too much money on this type of shopping, despite the fact that the main activation factor was an effective price promotional campaign.

Often it happens that in the situation of this type of occasional purchases for stock some of the purchased products are thrown away, that is, they end up in the trash.

Especially often such situations happen, if consumers under the influence of emotional susceptibility to marketing content used in an advertising campaign make purchases of food products with a short shelf-life date.

These are typical situations indicating the unnecessary purchases of unnecessary products by consumers.

In such situations, the effectiveness of advertising campaigns can be analyzed in terms of the psychological impact on consumer emotions, so this is the subject matter of the issue described as behavioral economics.

According to classical and neoclassical economics, consumers rarely change their preferences, and if they change it is a very slow process, difficult to diagnose in a short time.

In addition, according to the trend of neoclassical economics, citizens, households and business entities maximize their own profits in the conditions of competitive market structures.

However, the results of experiments and conducted research in the field of behavioral economics have already questioned the fundamental assumptions on which the theory of choice in the neo-classical economy is based.

Why is it so that people do not always make rational economic decisions?

The answer to this is given by behavioral economics, which deals with cognitive errors affecting people's decisions.

These decisions are not always rational and because they concern many shopping situations not always needed products, so they are also of significance for the domestic or even global economy.

The global significance of these not always rational economic decisions arises when the effects of these decisions are analyzed in the context of economic globalization processes.

In addition, the results of research in the field of behavioral economics indicate that consumer preferences may change depending on the context, ie the specificity of a particular situation in which decisions are made.

In addition to the study of consumer behavior on the basis of behavioral economics, there are behaviors of, for example, investors on capital markets who also often do not have full information about the issuer of securities buy or sell shares, bonds and other instruments listed on securities markets under the influence of partly emotions and not just rationally made decisions.

Emotion, which often accompanies decision making about purchasing or selling securities, may have positive acceptance of high risk levels in good times in different markets and as a result of the so-called "sheep's rush", which boils down to buying, because it was previously bought by a friend and neighbor, and earned it.

There may also be irrational decisions on the sale of securities in a situation where it later turns out to be a short-term panic on the capital market.

In the light of the above examples, irrational economic decisions made by citizens and economic entities often conditioned by the psychological factor of positive or negative emotions are more and more numerous.

This raises the question why more and more in recent years we will be able to provide these examples confirming the validity of the development of research in the field of behavioral economics.

Is it because in recent years more and more economists are growing up and seeing research in the field of behavioral economics?

Or rather because in the deregulated financial markets market instability situations are more frequent, markets tend to lose their market equilibrium, financial crises occur more frequently, and the scale of undervaluation and the more revalue of market valuations of certain assets can be more and more pronounced on stock exchanges.

Analogously, the impact of more and more effective advertising campaigns on consumers, advertising campaigns also conducted on social media websites can increase the importance of occasional emotions in the context of decisions to buy specific products or services.

In view of the above, the current question is: Do consumers always make rational consumer decisions when purchasing economic goods?

Please reply, I invite everyone to the discussion,

Thank you very much,

Best wishes,

Dariusz Prokopowicz

What kind of scientific research dominate in the field of Analysis of the effectiveness of stock exchange markets?

Please, provide your suggestions for a question, problem or research thesis in the issues: Analysis of the effectiveness of stock exchange markets.

Please reply.

I invite you to the discussion

Thank you very much

Best wishes

The basic data used to determine the effectiveness of commercial banks are included in the banks' financial statements. these data relate to the bank's involvement in specific active transactions, necessary to determine the quality of the loan portfolio, to determine the quality of credit, operational, liquidity, debt, operational risk management processes, etc. An IT risk analysis should be added to this. In addition, financial statements also include data to calculate the deposit security ratio, profitability of individual categories of assets and use of available financial resources. This type of data should be combined with individual categories of estimated risk levels measured in correlation to the involvement in individual active operations. However, in the case of the analysis of the investment bank's effectiveness, it should additionally include an analysis based on risk assessment models for investment in derivatives and other capital market instruments. In this regard, many banking procedures were previously unreliably carried out which generated very high levels of credit risks and caused huge financial losses, eg in the Lehman Brothers investment bank, bankruptcy of this bank and the beginning of the global financial crisis in mid-September 2008.

I researched this problem and in my publications I confirmed that it is possible to combine the question of the reliability of banking procedures implemented in the area of risk management with sources of financial crises.

However, I would like to hear your opinion on this matter.

In view of the above, I am asking you the following question: Is it possible to combine the ethics of banking procedures in the field of banking operations with the sources of financial crises?

Please, answer, comments. I invite you to the discussion.

Covid-19 is overwhelming some countries in terms of infections and casualties. It is an unfortunate situation that shows no end. In some countries the problem is compounded due to incompetent of the governments in managing the crises and by politicizing the pandemic for personal gain.

Many businesses could not survive the prolonged partial or full shut down and closed down. Some other business however performed very well. Is the cause of success, the ability and willingness to change and adopt to new challenges, or other parameters involved?

Companies were already in crisis before the pandemic. What will happen now that many workers are layoffs and sales have fallen?

Have the procedures for the development of reports and recommendations by the rating agencies already been improved compared to the situation before the global financial crisis of 2008?

Are the reports and recommendations issued by the rating agencies more honestly developed, in accordance with the principles of business ethics, have the procedures for their development and the objective information policy been improved and still function as before the global financial crisis of 2008?

Please reply

I invite you to the discussion

Thank you very much

Best wishes

The study of the functioning of securities markets is particularly important in the context of the analysis of the effective functioning of modern economies. It is particularly important to limit the systemic investment risk and strengthen the instruments of financial supervisors to reduce the likelihood of further global financial crises.

In view of the above, I would like to ask you: Analysis of the functioning of securities markets?

Please, answer, comments. I invite you to the discussion

Do the significant revaluation of stock quotes on stock exchanges occurring every few or a dozen years is an objective specific feature of this type of financial market or rather it is imperfection of these markets resulting from too high a level of liberalization and deregulation of the mechanisms of these markets, including the reduction control functions of financial supervision institutions?

Since the 1970s, the functioning of individual segments of financial markets has been successively liberalized and deregulated, including primarily the issue of investment banking, international markets and exchange rate systems, rating agencies, financial adversity institutions and financial entities and instruments operating on the securities market. During this time, the scale of the re-valuation of valuations of securities, derivatives, commodities and other assets on the capital markets reached ever higher levels, then spectacularly transformed into a strong decline in these valuations leading to a financial and economic crisis. The last financial crisis in 2008 in many respects, including numerous negative aspects, generated the unruly records characterizing the highest level of investment risk and the scale of financial losses generated by many commercial financial institutions and industrial corporations, which then under the active, interventionist, anti-crisis monetary policy of banking were financed indirectly by public finance funds. Due to this cyclical nature of capital markets, characterized by the growing amplitude of economic fluctuations during periods of bull market and bear market at high levels of overvaluation and investment risk levels and deeper global financial and economic crises, large financial institutions, including investment banks, are becoming larger entities and costs neutralizing the negative aspects of crises is paid off by the whole society, especially by the relatively less-earning middle class.

In the light of the above, encouraging discussion, I turn to you with the following question: Has the time finally come to reform the functioning process and the system of financial markets by restoring former control functions of financial supervision institutions that have been abolished, reduced since the 1970s?

Are increasingly deep financial crises derived from the liberalization and deregulation of financial markets?

Please, answer, comments. I invite you to the discussion.

What kind of scientific research dominate in the field of Global financial crisis?

Please, provide your suggestions for a question, problem or research thesis in the issues: Global financial crisis.

Please reply.

I invite you to the discussion

Dear Friends and Colleagues of RG

I invite you to discussion and cooperation.

Best wishes

What do you think are the most important sources of financial and economic crises?

Which sources contributed to the generation of financial and economic crises in the past?

What do you think sources of future economic crises will dominate in the future? What kind of economic crises will dominate in the 21st century?

Please, answer, comments.

I invite you to the discussion.

Dear Friends and Colleagues of RG

I invite you to discussion and cooperation.

Best wishes

In the face of increasingly frequent financial crises and speculative bubbles, economists are looking for solutions aimed at healing or constructing a new monetary system. And although their concepts differ in their details, they are all in line with the idea that the issue of money and its benefits belong to the whole of society. Can decentralized digital currencies help solve this problem? Who really and why invest in virtual currency?

For my thesis I would like to examine numerous events (Lehman collaspe, September 11, and other major global events and examine the impact/correlation on the BRICS and G7 nations.

I would like to do an event study using the Market Model, but as I understand, I do not think i can use AR (Abnormal Returns) as I am not looking at specific stocks, but using the major indices in each country (E.G. MOEX, IBOVESPA, CAC40, DAX30 etc.)

I have come across the FTSE Global Equity Index Series (GEIS), https://www.ftse.com/products/indices/geis-series but do not have access to the data. Alternatively, I have found on Datastream MSCI World, FTSE Developed, FTSE Emerging, FTSE All World, and FTSE Global. Would one of these suffice?

My main research idea is to examine whether the investor risk tolerance between emerging (BRICS) and developed nations (G7) differs significantly by seeing how the markets react to each event and volumes traded.

Any help in this matter would be greatly appreciated.

How is the democratic act influenced by the level of education? Can the democratic elections and decisions be lucrative and assure a sustainable development (socio-economic) if the quality of general education is low? The role of adult education is to be discussed, parenting process, the influence of media, and marketing of different products and services as to serve the financial interests as well.

How can the media image of the current and prospective situation of companies of issuers of securities, whose shares and bonds are valued on capital markets, be improved?

How should the reporting of issuers of securities companies be improved so that shareholders and investors operating on the markets and stock exchanges will receive more complete and necessary information about the economic and financial situation of individual capital companies?

How should the financial supervision institutions over stock exchange markets motivate capital companies to improve the issues of information practices and reporting, so that shareholders and investors receive current and complete information on the economic and financial situation of individual capital companies?

At present, the trend of increasing the scope of the publicly announced scope of information on the economic and financial situation of individual companies is predominant, so that shareholders and investors, in addition to standard information in the field of reporting, that is, publicized in the media according to certain standards of financial information given in a given financial statement format, also receive information describing the possibilities and prospects for the development of a specific enterprise, a capital company whose securities are valued on the stock exchange. As a result, shareholders and investors should be better informed about the economic and financial situation of individual companies and entire capital markets. The improvement of information standards prevailing in the media in the economic and financial situation of individual capital companies should also increase the correlation of the situation on capital markets with the economic situation in the entire economy. In this way, the probability of further global financial crises will be significantly reduced.

Therefore, I am asking you with the following query:

How can you improve the media image of the current situation of companies operating on capital markets?

Dear Friends and Colleagues of RG

I described the problem of "Anti-crisis state intervention and created in media images of global financial crisis" in the publication:

Please reply

Best wishes

What do you think about the possibility of forecasting economic processes based on the analysis of large data sets in Big Data database systems?

Will Big Data help in precisely forecasting future economic processes, including in terms of forecasting stock exchange trends on stock exchanges?

Will Big Data help in forecasting future, next financial, economic and other crises such as climate disasters, weather anomalies, earthquakes, etc.?

Please reply

Best wishes

In addition to many economic and financial sources in the field of unreliable risk management procedures, re-evaluation of assets on capital markets, long-term too low interest rates by central banks, granting loans to entities without creditworthiness, etc., according to non-classical theories, other sources of crises economic.

One of these non-classical theories is combining deep economic crises with technological revolutions, the secondary effect of which is over-investing in technological projects and re-evaluating the assets that these projects relate to.

In view of the above, I am asking you: Can the genesis of global economic crises be combined with technological revolutions?

Please, answer, comments. I invite you to the discussion.

The evolution of world economy is strongly conditioned by the financial system, and specially by the behaviour of the numerous and diverse financial markets (stocks, money market, forex, interbank, bonds, derivatives, commodities, etc.). For this reason, financial variables determine consumption, investment, foreign trade and public spending.

I propose this question, in which I would like to know if you agree or consider open some additional points of view of the economy that may condition new economic crises. Thank you.

In the context of increasing waste generation and packaging it appears that Japan and several EU countries are ahead in providing best practises and solutions that enhance solid waste management and circular economy. However, the final fate and effects for the value chain of the recovered materials are often uncertain, especially since relevant volumes of recovered materials are manged in 'waste-to-energy plants'. Likewise, the sustainability and environmental effects of actual solutions need to be discussed based on the reliability of existing recycling markets, whereas the latter was significantly impacted during the financial crises in 2008, and may presently being affected due to the recently announced import ban for plastic packages / waste by China. 

Hello dear all,

I need some help about this:

For a chapter of my PH.D. thesis, I have 2 objectives, and one of them is to assess the role of inflation targeting in the relationship between GDP growth and financial instability. Therefore I specifiy the following equation:

with Y the GDP growth, FII our measure of financial instability, IT a dummy variable for inflation targeting (taking value 1 for targeters countries, and 0 otherwise), X vector of control variables.

As the effect of interaction (b3) could be positive or negative, I try a non-linear relationship, so I add an interaction term taking FII squared, as :

Are the preceding equations correct?

I use 2 stages GMM for estimations of these equations.

Please, find attached a file with more details about what I want to do.

Please excuse my English, I’m French speaker.

Kindly!

Dear community.

I have been recently working with certain macroeconomic event (i.e Sudden Stops, financial crises, among others) data that I would like to read in Stata to estimate a Hazard model. However, I am not sure which approach I should take into consideration when including the data.

I have thought of two different approaches to tackle this issue (see attached excel file). All of my variables have been exposed to the event for the same amount of time. In addition, I have a time varying coavariate to be used in a regression (named x1).

In the first approach, I simply roll the time variable for each year of exposure, and I would be using the following Stata instruction:

stset time, failure(event) id(ID)

In the second approach, I collapse the dataset by different exposure periods, while averaging the covariate x1 (i.e for a given id, if its observations are 0 0 1, then I will have one observation with that ID including a number 1, with the total time of exposure and the average of x1 for those periods). following that, I would set the data with this instruction:

stset time, failure(event) id(ID)

Any help, and if possible, a referral to a paper working this out in a panel data framework is deeply appreciated.

Best regards

Juan

Option 1: CDS should be banned

Option 2: CDS should be regulated

Option 3: CDS should be left as they are

This article discusses the intrusion of federal law into the corporate governance area - an area that was previously the bailiwick of state law. The Sarbanes-Oxley Act of 2002 ("SARBOX") and Dodd-Frank are two prominent examples of this intrusion. Both Acts have as their purpose protection of the public -- the investing public in the case of SARBOX and consumers (as users of products and of credit) in the case of Dodd-Frank. Does creating a public good like "restoring investor confidence" justify federal intrusion into the corporate governance area? It should be kept in mind that SARBOX applies to all corporations listed on American stock exchanges; hence, it has long-arm jurisdiction to reach multinational corporations that are not incorporated in the U.S.

Gwen

It is general perception that Islamic Mutual funds perform better in period of crises. What are the basic reasons for such over performance? 

Mexician peso crisis (1994), Russian crisis (1997), Asian Financial crisis (1998), dot-com bubble bursts (2000-02), Sub-Prime / Global Financia crisis (2007-09) and most recently the European debt Crisis (2010-12). 

Please state the trading days with reference. 

The topic of my dissertation is foreign exchange market efficiency with focus on Europe and the financial crises countries experienced in last 10 years. 

I have trouble finding data on bank bailout in the period 2007-2009 (could also be possibly be longer).

Preferably I would have a measure of tax money spend as a % of GDP on bank bailouts. Alternatively, I would just like to have dummies of countries that have had bank bailouts during this periods, and countries that have not. 

I am conducting my qualitative research in the area of corporate governance , particularly to explore the role of NEDs' and how they may provide any solution to the financial recovery.Please suggests me any suitable social theory and some good qualitative research papers in this area.

For case study of Latvia results reveal that the energy intensity increases during economic downturn, the LMDI analysis showed that this fact is regarded to the expansion of energy demanding sectors.

This reallocation of energy resources for energy demanding sectors have a potential to slow down the convergence of energy intensity or even increase energy intensity in Latvia!

Do you know of any other research with similar of contradicting results?

What is the situation in your country?

I am interested in assessing why some countries were harder and/or differently hit by the current global financial crisis. As a dependent variable I would like to use a measure that codes financial stability within countries over time. 

I am wondering what kind of measure to take, as well as were I possibly could find data to assess cross-sectional differences between an as large as possible sample of countries (but hopefully at least the OECD countries).

Theoretically it looks relevant for such a problem, but didn't come across any study dealing with such  specific application.

While copulas have been blamed as one of the causes of the financial crises, their mathematics is quite interesting. I would greatly appreciate any resources that discuss these in greater detail (outside of the traditional papers ex Frank and Gumbel)

I am using the fed rate as a proxy for Liquidity crises in US, however I had a comment that  the interest rates can be used for general monetary policy purposes. So, I have to provide evidence that the Fed interest rates are not used in us from 1954 to 2011  for general monetary policy purposes, then this quantity cannot be used as a measure of liquidity crisis. Is there any thing in the literature related to this issue. what is the best proxy for liquidity crisis ( credit crunch) ?

As we all know as human beings grow they are exposed to some risks. Financial institutions are also likely to suffer same. The global financial crises are indication of the vulnerabilities associated with expanded financial system. Does this apply to MFIs? What kind of risks are associated with MFIs as they grow? How do even conceptual growth of MFIs?

It seems that we can predict financial crises ahead but no one rings the bell, for example the real-estate crisis in the United States was long before expected but no actions was taken.

Alpha is a risk-adjusted measure of active return on an investment.

The FF 3 factor model is emerging 2 classes of stock with CAPM to reflect a portfolio's theory.

r - Rf = beta3 x ( Km - Rf ) + bs x SMB + bv x HML + alpha

Alpha Coefficient can show that in an efficient market, the expected value of the alpha coefficient is zero. Therefore the alpha coefficient indicates how an investment has performed after accounting for the risk it involved:

Alpha_i < 0 : the investment has earned too little for its risk (or, was too risky for the return)

Alpha_i = 0 : the investment has earned a return adequate for the risk taken

Alpha_i > 0 : the investment has a return in excess of the reward for the assumed risk

Teaching students at universities to worry not only about the bottom line but the society, community, planet etc...

The impact of financial crisis of 2007 on pension funds

Has all the printed money been given or lent to the state for the government to finance jobs & growth fiscal & spend policies?

If the money is lent to the state, it will have to be redeemed to the central bank at some stage. Does this inflate the country's debt figures? And when the money is redeemed, what happens to it? Is it destroyed, or kept in some way?

How much of recent Quantitative easing in the US and UK been directed towards the private sector?

Today, many European countries are suffering under the European crisis, and I think that it could mean a crisis for education, agriculture and forestry in Europe. What is your opinion?

Has the decreased interest rate in USA, EU, Japan helped to create new blood in the economy? Have trademark registrations increased? Have patent registrations increased? Have small businesses increased in numbers? If not, something is very wrong about the economy...

During crisis times exposure to risk factors specific to each crisis is a major threat to the continuity of activity. In order to achieve a informed decision regarding the future perspectives of a company, and correctly rate it's stocks some degree of known risk factors exposure disclosure should be done. Another important issue should be a publication of special financial statements for bankrupt companies, in order to enable the research of risk/protection factors and the means of crisis contagion. This raises questions about the need for a specific, dedicated accounting standard for insolvency/bankruptcy situations that would enable scientific research with applicable results in avoiding bankruptcy risk increase.