The Origins of the Global Financial Crisis and Its Impact on Romanian Economy
AbstractAsymmetric 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 InfoArticle 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 ()
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Information asymmetry; Moral hazard; Adverse selection; Financial crisis; Default rate;
Find related papers by JEL classification:
- G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
- G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
- E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
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- 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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