1,721,030 research outputs found
Policy debate: understanding the credit crisis: why banks collapsed - and with them the mainstream paradigm in economics and finance
No full textThe financial crisis has raised questions about the role of banks in the economy and society. Credit unions are not-for-profit financial institutions that do not pay substantial bonuses, do not engage in speculative investments, but focus on local, smaller-scale lending and redistribute their proceeds to their members. They are important in most major economies, but not in the UK. In this analytical paper a new hypothesis concerning their lack of expansion in Britain is considered by asking the question whether they have been awarded the same public privilege as banks, namely to create credit. There is no prior literature on this issue. An analysis of the regulatory environment yields that, unlike in other countries, they have had no material credit creation powers until 2002. Since then their capacity to create credit has remained severely restricted
Book review. Japanese business management: restructuring for low growth and globalisation, edited by Harukiyo Hasegawa and Glenn D. Hook
No full textThe unintended consequences of the debt
No full textCurrently governments worldwide are embarking on some of the largest fiscal expenditure programmes witnessed in peacetime history. The fiscal expenditure is considered necessary to support the economy and prevent a serious recession. Fiscal expenditure will be used to purchase equity in banks and non-performing assets, compensate depositor losses and to engage in active government investment and spending programmes. It is the purpose of this study to examine the overall impact, including the unintended consequences, of the substantial increase in fiscal expenditure. The most relevant recent experience in similar circumstances is that of Japan in the 1990s: a paralysed banking system required public fund injections and the government implemented what until then was one of the largest peacetime fiscal stimulation programmes on record. This resulted in sizeable public debt. However, the effect of fiscal policy has been disappointing. In this paper, the explanations provided by the literature and their unsatisfactory empirical record are first reviewed. An alternative explanation, derived from early Keynesian models on the ineffectiveness of fiscal policy is presented in the form of a modified Fisher-equation, which incorporates the recent findings in the credit view literature. The model postulates complete quantity crowding out. It is subject to empirical tests, which were supportive. The present banking bailout packages are thus likely to result in a reduction in private sector demand. However, it is also shown that by changing the funding strategy, complete crowding out can be avoided and a positive net effect produced
Letters To The Editor: South African central bank responsible for fall in rand
No full textFrom Mr Richard A. Werner. Sir, You report ("Deutsche Bank rejects claims its deals caused sharp fall in rand", April 5) that the South African rand's 37 per cent decline in 2001 "left economists baffled and raised fears that its cause was market manipulation by financial institutions", for which, among others, Deutsche Bank found itself accused. I would like to correct the first and clarify the second part of your statement. The Profit Research Center, an independent research and fund advisory firm based in Tokyo (in no way related to Deutsche Bank), placed a "sell" recommendation on the rand in February 2001, which we have maintained so far. Our international currency models are based on our measure of central bank liquidity injections, and South Africa is no exception. We noticed an extraordinary surge in the liquidity injected by the South African Reserve Bank, beginning in late 2000, which has continued until this day. This autonomous policy by the Reserve Bank is responsible for the depreciation of the rand. However, it has also had its benefits: thanks to the booming credit creation we placed a "buy" recommendation on South African equities in January 2001. Equities are up almost 40 per cent in the past year. Therefore, the decline of the rand is neither baffling nor the result of manipulation by financial institutions. If one were to look for a manipulator, the only candidate would be the central bank. Richard A. Werner, Chief Strategist, Profit Research Center, Tokyo 150-0001, Japa
Bernanke's speech shows where BOJ failed
No full textBernanke differentiated his quantitative monetary policy from that of the Bank of Japan. His policy is more in line with the original definition of 'Quantitative Easing' by Richard Werner, namely increased credit creation. Hence the US economy is likey to recover far sooner, while growth is likely to lag in countries such as Japan, the UK or Spain and Ireland
- …
