Frontiers in Finance
March 2008 | PDF | 48 pages | English
The financial services sector has been much in the news recently and the news has not been good. Within the space of a few months, we have seen the onset of a severe credit crunch, a liquidity crisis at Northern Rock leading to a run on the bank and Société Générale revealing it has lost 4.9 billion ($7.1billion; £3.7 billion) closing out massive unauthorized trades placed by a rogue employee. Some respected commentators are speculating about the onset of a global recession.
This edition of frontiers in finance is primarily focused on retail banking, but touches on all of these themes. While it is impossible and foolhardy to predict in detail how the credit crunch will play out, some general implications can be foreseen. And the rest of 2008 looks certain to be a bumpy ride.
On the other side of an increasingly-connected globe, Chinas capital markets continue to expand. The sheer size of the sums of money involved means that the country is already a significant force. The authorities are steadily liberalizing Chinas exchanges. Stock market capitalization has risen ten-fold in just 2.5 years. Bond and derivative markets are less well-developed as yet. But unless there is a dramatic policy U-turn by the government, these are likely to follow suit.
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