FİNANSAL PİYASALAR VE KURUMLAR

Current account deficits, mismanagement of financial liberalization, and asset price bubbles or booms are causes of financial crises, whereas rises in debt burdens are an example of outcomes of financial crises.

Dutch Golden Age: The name given in Dutch history between the years 1585-1702. In this period, the Netherlands became one of the world’s leading countries of science, commerce and art.

The 1772 credit crisis is the first of these panics. This crisis was an indirect consequence of the bankruptcy of the East India Company, and it took place in England in 1772 in connection with the bombing of the Bengal Balloon.

The 1929 Wall Street Depression (October 1929) or the Great Depression was the most devastating financial collapse ever seen in US history to that date when its consequences were taken into account. The financial collapse caused by the Great Depression initiated a ten-year economic
slowdown affecting all western industrialized countries.

Another reason for the downturn in the financial sector was the lack of supervision and the necessary laws in the sector. There was no banking law to determine how much of the reserves of the banks could be given as loans. In other words, under-regulation (not over-regulation) was one of the causes of the 1929 crises.

The effects of the crisis were the rise in interest rates, an increase in recession in the economies, and the sudden capital outflows. There were various solutions to the global debt crisis: Baker’s plan, Brady’s plan, legal and political regulations and debt-equity changes.

The global crisis in the US began in the financial sector, then leaped to the real sector and spread the whole economy over time. Unrequited debt led to the bankruptcy of financial institutions, consumer confidence was shaken in the market and the financial crisis was transmitted to the real sector as demand in the real sector contracted.

The financial crisis which broke out in the US real estate market in the second half of 2007 became a global crisis in 2008 with the bankruptcy of “Lehman Brothers” in September 2008. The crisis has brought a serious recession in the economies of almost all countries worldwide and finally in Europe. The global crisis resulted in serious increases in public deficits and debt stocks in the  European Union (EU) countries and became a threat to sustainability of public finances in many member states.

The Basel Committee on Banking Supervision (BCBS) is the primary global standard setter for the prudential regulation of banks and provides a forum for regular cooperation on banking supervisory matters.

Regulatory frameworks in regarding financial institutions utilize:
• Disclosure requirements (disclosure of financial statements and relevant information)
• Deposit insurance
• Capital requirements
• Supervision
• Assessment of risk management
• Restrictions on competition