Financial Intermediaries Versus Financial Markets: A South African Experience

Financial Intermediaries and Markets

A complex financial system comprises both financial markets and financial intermediaries. We distinguish financial intermediaries according to whether they issue complete contingent contracts or incomplete contracts. Intermediaries such as banks that issue incomplete contracts, e.g., demand deposits, are subject to runs, but this does not imply a market failure. A sophisticated financial system...

Emerging Markets and Financial Intermediaries

Over the last fifteen years, emerging economies have experienced abrupt changes in bond spreads and large movements in capital flows. We propose a simple general equilibrium model where international investors hire fund managers to invest their capital either in the bonds of an emerging economy or in a riskless asset. We model the emerging economy as a small-open economy subject to an aggregate...

New Special Study of the Securities Markets: Financial Intermediaries

Endogenous versus Exogenous Crashes in Financial Markets

In a series of papers based on analogies with statistical physics models, we have proposed that most financial crashes are the climax of so-called log-periodic power law signatures (LPPS) associated with speculative bubbles [Sornette and Johansen, 1998, Johansen and Sornette, 1999, Johansen et al., 1999, Johansen et al., 1999, Sornette and Johansen, 2001]. In addition, a large body of empirical...

Asian Financial Crisis: The South Korean Experience

Why was it that the Korean economy, which had been envied and imitated by other developing economies for the past 30 years, suddenly spiraled into a currency-induced crisis late in 1997? How was it possible that such a vibrant economy, which had been developing so rapidly, displaying in fact the most rapid development amongst the Asian nations, was suddenly overcome by such a severe economic do...