KEY ECONOMIC POLICY LESSONS FROM THE 2008 FINANCIAL CRISIS

The current turmoil has shaped the world financial market. While the crisis materialized in 2008, it already began in mid-2000s when the US economy shifted to imbalanced both internal and external macroeconomic positions. We see three key causes of these problems – loose US monetary policy in early 2000s, US government guarantees issued on the securities by government-sponsored enterprises and financial innovations such as structured credit products. We have discovered both negative and positive lessons deriving from this crisis and divided the negative lessons into three groups: financial products and valuation, processes and business models, and strategic issues. Moreover, we address key risk management lessons derived from the current crisis and recommend policies that should help diminish the negative impact of future potential crises.financial crisis, securitization, liquidity risk, risk management

THE BANKING STABILITY IN THE CZECH REPUBLIC BASED ON DISCRIMINANT AND CLUSTER ANALYSES

anking sector can have important effects on all economic units. Therefore stability of the banking sector is important for every economy. In the Czech Republic the banking sector has undergone profound changes after 1989. This study aims to develop a stability model for the banking sector in the Czech Republic using data for the period from1995 to 2005. According to the model developed in the study stability of banks is easily evaluated. In this study concerning 38 banks in the Czech Republic’s banking sector 17 banks are found to be at a satisfactory level according to the model.bank, stability, financial indicators, discriminant analysis, cluster analysis

Procyclicality as a source of systemic risk?

ABSTRACT This paper deals with procyclicality from both accounting and systemic risk point of view. The Basel Committee of Banking Supervision has called for amends in the accounting standards as there are several accounting issues affecting the business cycle. Certain changes have been made and the accounting standards are in the process of upgrading. We argue that it is not possible to omit the procyclical factors altogether, however. The accounting should provide transparent information and it is the task of regulators with the prudential tools to deal with any procyclicality. We highlight that the improper regulation of procyclicality might cause higher systemic risk of financial institutions