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The Origins of the Global Financial Crisis and Its Impact on Romanian Economy

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  • Corina SBUGHEA

    ()
    (Faculty of Economics and Business Administration, “Dunarea de Jos University of Galati, 59-61 Nicolae Balcescu Street, Galati, Romania)

Abstract

Asymmetric information theory says that individuals who cooperate in different situations have different levels of knowledge on a subject. The main role of a financial system is to direct funds to individuals and companies that have good money investments. To do this correctly, participants in financial markets should be able to make correct opinions on which investment opportunities are in some measure efficient. This is where the problems of information asymmetry occur: moral hazard and adverse selection. So financial crisis are triggered when these problems become particularly acute, and financial markets are unable to perform this crucial role of channeling funds to those who have the most efficient investments. Recent financial crisis, triggered in the U.S. and spread globally, has not spared Romania, and the present paper tried to highlight its main effects on our economy.

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Bibliographic Info

Article provided by "Dunarea de Jos" University of Galati, Faculty of Economics and Business Administration in its journal Economics and Applied Informatics.

Volume (Year): (2011)
Issue (Month): 1 ()
Pages: 107-112

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Handle: RePEc:ddj:fseeai:y:2011:i:1:p:107-112

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Postal: No. 59-61, Nicolae Balcescu Street, Postal Code 800008, Galati
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Related research

Keywords: Information asymmetry; Moral hazard; Adverse selection; Financial crisis; Default rate;

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  1. Frederic S. Mishkin, 2001. "Financial Policies and the Prevention of Financial Crises in Emerging Market Countries," NBER Working Papers 8087, National Bureau of Economic Research, Inc.
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