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The Impact of the Subprime Financial Crisis on the Transition and Central Asian Economies: Causes and Consequences

In: An Assessment of the Global Impact of the Financial Crisis

Author

Listed:
  • Nigel F. B. Allington
  • John S. L. McCombie

Abstract

The subprime crisis precipitated the worst recession amongst the OECD countries since the Second World War. Although the value of subprime assets as a proportion of total financial assets was relatively small, the excessive leverage of many US and UK financial institutions, the marked revaluation of the risk associated with securitised assets, together with the collapse in world trade, meant that the 2008–10 crisis was the worst since the Great Depression of 1929. Moreover, contagion effects, especially those initiated through the freezing of the interbank and international financial loans markets, meant that the impact of the crisis extended far beyond those relatively few countries (especially the US and UK) whose banks were holders of the ‘toxic assets’.1 In this chapter the impact of the financial crisis on the European Union Transition Economies (TEs) and the transition Central Asian Economies (CAEs) is examined.2 Particular attention is paid to the financial transmission mechanism that was crucial in determining the impact of the crisis on the TEs.

Suggested Citation

  • Nigel F. B. Allington & John S. L. McCombie, 2011. "The Impact of the Subprime Financial Crisis on the Transition and Central Asian Economies: Causes and Consequences," Palgrave Macmillan Books, in: Philip Arestis & Rogério Sobreira & José Luis Oreiro (ed.), An Assessment of the Global Impact of the Financial Crisis, chapter 8, pages 159-181, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-0-230-30691-2_8
    DOI: 10.1057/9780230306912_8
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