55 research outputs found

    Searching For Causes Of The Current Financial Crisis: On Risk Underassessment And Ignorance

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    The paper presents the author’s views on one underlying cause of the current financial crisis: the erroneous assessment of risk by market participants. We argue that besides other convincing explanations of the causes behind the recent financial turmoil such as loose government and central bank policies, the process of market liberalization, investors’ appetite for risk and excessive financial modeling, we need to recognize the fact that underassessment of risk by market participants and policy makers is a major cause for the current crises, as for previous ones. This underestimation of risk comes largely as a result of two realities: first, risk magnitude was not entirely known by market participants, due to an interlinking of securities, structures, and derivatives built around the subprime mortgages; second, market participants ignored these risks to a large extent, in a world were access to financial markets was as easy as never before.financial crisis, risk underestimation, subprime mortgages

    Regulation versus Competition on European Financial Markets

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    Competition is the mechanism that helps companies, institutions and markets to become more productive and efficient. one of the main obstacles to economic growth is represented by the policies that hinder competition. Excessive protection may create a handicap for the European economic system which will have not all the necessary instruments to face the increasing competition between companies, countries, economic regions.The paper aims at analyzing the relationship between regulation, competition and economic performances applied to European capital markets, as opposed to US capital markets.regulation, competition, capital market, integration

    MBA education: a must in a competitive Romanian business environment

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    The effective management of Romanian companies can represent an advantage in a competitive business environment, shaped by the end of transition, the EU membership and the globalization process. MBA programs represent, in our view, the key for the implementation of management theories and practices whose effectiveness has been validated by Western countries experience. The Romanian market developed slowly since 1993, with three major players dominating it: the Romanian-Canadian MBA, ASEBUSS Executive MBA and CODECS. These programs and the more recent entrants are facing legal recognition uncertainties and competition from the new professional master programs that will be developed under the Bologna framework, in addition to competition from European and American MBAs. The responses of Romanian MBAs to these challenges are critical for their future in an increasingly competitive environment.management, MBA, competition, education

    On The Exchange Rate Risk Contribution To The Performance Of International Investments: The Case Of Romania

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    The paper examines the impact of changes in the Romanian currency exchange rates against the US dollar and the euro on an investment in the Romanian stock market from the perspective of a US dollar and euro based investor. Our analysis is directed towards identifying the significance of exchange rate volatility for the total risk of a Romanian investment from the perspective of investors with the US dollar and euro as reference currencies. Our results indicate that during more turbulent times investors were better off if invested in their home markets. We also find that the exchange rate risk decreased the risk that a US dollar or a euro-based investor was exposed to in Romania. The contribution of exchange rate risk to the risk of an international investor diversified in his home market and the Romanian market is small, even negative, with no significant differences turbulent versus normal times.Exchange rate, Romania, international investments, volatility

    INTERNATIONAL INVESTMENTS WITH EXCHANGE RATE RISK: THE CASE OF CENTRAL AND EASTERN EUROPE CURRENCIES

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    The paper investigates the impact that exchange rate risk has on the risk-return profile of investments in emerging countries. The emerging countries under scrutiny are Czech Republic, Hungary, Poland, Romania, Russia and Turkey, all from Central and Eastern Europe. We examine the importance of currency risk from the perspective of a US dollar based investor, by looking at the contribution that changes in exchange rates of these countries’ currencies against the US dollar has for the total risk of investments in these markets, on one hand, and on the correlation between these markets’ returns and the US market return. Our analysis spans over an interval between December 2005 and August, 2009, thereby taking into account the exchange rate risk contribution in normal versus turbulent times. We find that exchange rate volatility is not an additional factor for the volatility of CEE markets when returns are denominated in US dollars. In general, exchange rate risk is a positive contributor to the risk of an investment in CEE markets, and that in more turbulent times, as the ones after September 2008, the impact of exchange rate risk is higher than in normal times. Moreover, in financial crisis times we observe that currency risk lowers the correlation between the US market and CEE markets, and does not indirectly increase the risk of a US investment made in any CEE market through the correlation between markets. Therefore, even in turbulent times, portfolio diversification in CEE financial assets may prove beneficial for US investors.Exchange rate, currency risk, international investments, Central and Eastern Europe

    LIBERALIZATION AND REGULATION IN THE EU ENERGY MARKET

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    Competition ensures competitive prices. In this respect, the liberalisation of the EU energy markets is a must. The regulatory framework for the energy markets should be properly designed and implemented by the member states in order to ensure enough competition. This paper aims to analyse the status quo of the EU energy markets in terms of regulatory framework and degree of competition and to recommend improvements of the system in order to balance the issues of competition, energy security and environment protection in the EU energy markets.Energy market, regulation, competition, energy security, climate change

    REAL EXCHANGE RATES AND STOCK PRICES: INSIGHTS INTO THE COMPETITIVENESS OF ROMANIAN ECONOMY

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    The paper investigates the dynamic links between stock prices and exchange rates in Romania, after 1997, considering the changes in the exchange rate regime occurred after 1997. The research employs advanced econometric methods – cointegration and Granger causality tests, in order to capture the bi-directional influences between stock prices and exchange rates, applied to monthly data over the 1999-2007 period. We use two types of exchange rates: nominal effective exchange rates and real effective exchange rates, aiming at revealing the competitiveness effects embedded in the real exchange rate evolution. In terms of stock prices, we use the BET and BET-C indices of the Bucharest Stock Exchange. We conclude that there is a long-term equilibrium relationship between the stock market performance and the nominal and real effective exchange rates, while the information is generally transmitted from the stock prices to exchange rates with a one-month lag in the case of cointegrated variables. Also, the exchange rates are the leading variables for the stock prices and the stock market adjusts quite dramatically to changes in the exchange rates in one month time in the case of cointegrated variables.exchange rates, stock exchange, cointegration, Granger causality, competitiveness

    On the dynamic link between stock prices and exchange rates: evidence from Romania

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    The theoretical linkages between exchange rates and stock prices are microeconomic as well as macroeconomic in nature and may be observed on the short- and long-run. The paper examines the interactions between the exchange rates and stock prices in Romania, after 1997, taking into account the change in the monetary regime occurred in 2005 – the shift towards inflation targeting. The analysis uses bivariate cointegration and Granger causality tests, applied on daily and monthly exchange rates and stock prices data collected over the 1999 to 2007 period. Three types of exchange rates are used: the nominal effective exchange rates of the Romanian leu, the bilateral nominal exchange rates of the leu against the US dollar and the euro, and the real effective exchange rates of the leu. In terms of stock prices, the BET and BET-C indices of the Bucharest Stock Exchange are used, denominated in the local currency.exchange rates, stock exchange, cointegration, Granger causality

    THE EUROPEAN ENERGY MARKET AT THE CROSSROADS

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    This paper aims to analyse the status quo of the EU energy markets in terms of regulatory framework and degree of competition and to recommend improvements of the system in order to balance the issues of competition, energy security and environment protection in the EU energy markets.energy market, regulation, competition, energy security
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