Are All the Sacred Cows Dead? Implications of the Financial Crisis for Macro and Financial Policies

The recent global financial crisis has shaken the confidence of developed and developing countries alike in the very blueprint of financial and macro policies that underlie the western capitalist systems. In an effort to contain the crisis from spreading, the authorities in the US and many European governments have taken unprecedented steps of providing extensive liquidity, giving assurances to bank depositors and creditors that include blanket guarantees, and structuring bail-out programs that include taking large ownership stakes in financial institutions, in addition to establishing programs for direct provision of credit to non-financial institutions. Emphasizing the importance of incentives and tensions between short term and longer term policy responses to crisis management, this paper draws on a large body of research evidence and country experiences to discuss the implications of the current crisis for financial and macroeconomic policies going forward.

Bibliographic Details

Main Authors:	Demirgüç-Kunt, Asli, Servén, Luis
Format:	Policy Research Working Paper biblioteca
Language:	English
Published:	2009-01-01
Subjects:	ACCOUNTING, ALLOCATION OF CAPITAL, AMOUNT OF CAPITAL, ARBITRAGE, ASSET MANAGEMENT, ASSET POSITIONS, ASSET PRICE, ASSET PRICES, BAILOUTS, BALANCE SHEET, BALANCE SHEETS, BANK ACCESS, BANK BRANCHES, BANK LENDING, BANK NATIONALIZATIONS, BANK REGULATION, BANKING CRISES, BANKING CRISIS, BANKING SYSTEM, BANKING SYSTEMS, BANKRUPTCY, BOND, BUSINESS BORROWERS, BUSINESS CYCLE, CAPITAL ACCOUNT, CAPITAL ACCOUNT TRANSACTIONS, CAPITAL ADEQUACY, CAPITAL INFLOWS, CAPITAL MOBILITY, CAPITAL MOVEMENTS, CAPITAL OUTFLOW, CAPITAL OUTFLOWS, CAPITAL REQUIREMENTS, CDS, CENTRAL BANK, CENTRAL BANKS, CHECKS, COLLATERAL, CONFLICTS OF INTEREST, CONTRACT ENFORCEMENT, CONVERTIBILITY PLAN, CREDIBILITY, CREDIBILITY PROBLEMS, CREDIT DEFAULT, CREDIT DEFAULT SWAP, CREDIT DEFAULT SWAPS, CREDIT EXPANSION, CREDIT GROWTH, CREDIT RATING, CREDIT RATINGS, CREDIT RISK, CREDITORS, CURRENCY, CURRENT ACCOUNT TRANSACTIONS, DEBT, DEBT INSTRUMENTS, DEBT MARKETS, DEFAULT RATES, DEPOSIT, DEPOSIT INSURANCE, DEPOSIT MOBILIZATION, DEPOSITOR, DEPOSITORS, DEVELOPING COUNTRIES, DEVELOPING COUNTRY, DISCOUNT RATES, DOMESTIC FINANCIAL MARKETS, DOMESTIC INTEREST RATES, DUE DILIGENCE, ECONOMIC DEVELOPMENT, EMERGING ECONOMIES, EMERGING MARKET, EMERGING MARKETS, EQUITY MARKET, EXCHANGE RATE, EXCHANGE RATES, EXTERNAL BORROWING, EXTERNAL DEBT, FACE VALUE, FINANCIAL CONTAGION, FINANCIAL CRISES, FINANCIAL CRISIS, FINANCIAL DEVELOPMENT, FINANCIAL DISTRESS, FINANCIAL FRAGILITY, FINANCIAL INSTABILITY, FINANCIAL INSTITUTION, FINANCIAL INSTITUTIONS, FINANCIAL SECTOR DEVELOPMENT, FINANCIAL SHOCKS, FINANCIAL STABILITY, FINANCIAL STRUCTURE, FINANCIAL SYSTEM, FINANCIAL SYSTEMS, FISCAL CAPACITY, FISCAL DEFICITS, FOREIGN CAPITAL, FOREIGN DIRECT INVESTMENT, FOREIGN DIRECT INVESTMENTS, FOREIGN EXCHANGE, FOREIGN EXCHANGE TRANSACTIONS, FOREIGN FINANCING, FOREIGN FUNDS, FOREIGN LOANS, FRAUD, GOVERNMENT BANKS, GOVERNMENT INVOLVEMENT, GOVERNMENT OWNERSHIP, GRACE PERIOD, INCOME LEVELS, INDIVIDUAL LOAN, INFLATION, INFORMATIONAL ASYMMETRIES, INSTRUMENT, INTANGIBLE, INTEREST RATE, INTEREST RATES, INTERNATIONAL BANK, INTERNATIONAL CAPITAL, INTERNATIONAL ECONOMICS, INTERNATIONAL FINANCE, INTERNATIONAL FINANCIAL INTEGRATION, INTERNATIONAL INVESTORS, INVESTMENT FLOWS, INVESTMENT OPPORTUNITIES, LENDERS, LEVY, LIQUID ASSETS, LIQUIDITY, LIQUIDITY CRISIS, LIQUIDITY PROBLEMS, LOAN, LOAN CONTRACTS, LOAN PORTFOLIO, LOCAL FINANCIAL MARKETS, LONG-TERM COSTS, MACROECONOMIC POLICIES, MACROECONOMIC STABILITY, MARKET DISCIPLINE, MARKET ECONOMY, MARKET FAILURE, MARKET INFORMATION, MARKET OVERSIGHT, MARKET PARTICIPANTS, MARKET RISK, MARKET SEGMENTATION, MARKET VALUE, MINIMUM CAPITAL REQUIREMENTS, MONETARY AUTHORITIES, MONETARY AUTHORITY, MONETARY FUND, MONETARY POLICIES, MONETARY POLICY, MONEY SUPPLY, MORAL HAZARD, NONPERFORMING LOANS, OFFSHORE MARKET, OFFSHORE MARKETS, OUTPUT LOSS, OUTPUT LOSSES, POLICY RESPONSE, POLICY RESPONSES, POLITICAL ECONOMY, PORTFOLIO CAPITAL, PORTFOLIO INFLOWS, PORTFOLIO INVESTMENT, PRICE STABILITY, PRICE VOLATILITY, PRIVATE BANKS, PRIVATE CREDITORS, PRIVATE EQUITY, PRIVATE FINANCIAL INSTITUTIONS, PRIVATE PARTIES, PRODUCTIVE INVESTMENTS, PROPERTY RIGHTS, PROPERTY RIGHTS PROTECTION, PROVISION OF CREDIT, PRUDENTIAL REGULATION, PRUDENTIAL REGULATIONS, PRUDENTIAL SUPERVISION, PUBLIC FUNDS, RATES OF RETURN, REGULATORY AUTHORITIES, REGULATORY STANDARDS, REPAYMENT, RESERVE, RESERVE REQUIREMENT, RESERVE REQUIREMENTS, RESERVES, RETURNS, RISK ASSESSMENTS, RISK DIVERSIFICATION, RISK EXPOSURE, RISK MANAGEMENT, RISK PREMIUMS, SAFETY NET, SAFETY NETS, SECURITIES, SHAREHOLDERS, SMALL INVESTORS, SOLVENCY, STATE BANKS, STOCK MARKET, STOCK MARKET TRADING, SUBORDINATED DEBT, SUPERVISORY AUTHORITIES, TAX, TAX COLLECTION, TRADE CREDIT, TRANSACTION, TRANSPARENCY, UNENFORCEABLE CONTRACTS, WARRANTS, WEALTH EFFECT, WEALTH EFFECTS,
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20090105103551 http://hdl.handle.net/10986/4005
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