This report reviews the 2007 financial crisis and the actions of the Federal Reserve. The Full Employment Act of 1946 and the "Humphrey-Hawkins" Act guides the Fed's actions. These two laws outline the long-term goals of the monetary policy framework the Fed uses; however, the framework lacks principles for achieving the mandated long term goals such as reliable, complete data. This report looks at the use of model-based forecasting and gives recommendations for principles which will strengthen the preexisting monetary framework. / text

<p>Purpose of this Master thesis is to analyze, understand and evaluate current financial crisis from the leadership perspective. In order to achieve this aim we made literature analysis, conducted interviews, analyzed failure case of Lehman Brothers and case of NYSE Euronext Lisbon. Furthermore, we created a questionnaire which was sent to the biggest companies in Europe. According to our investigation, we found out that the most suitable methodological view for our research is a combination of analytical and system views. Analysis of our findings shows that financial crisis was highly caused of the failure of leadership in the financial sector. We found out that leaders have to be aware of these main problems: nowadays word is extremely interconnected and one variable can affect the whole system, huge short-term returns cannot marginalize long-term foresight, risk has to be measured and estimated, leaders has to pay a lot of attention to their strategies, plan, rethink and if it is necessary reshape them. Moreover, leaders now face more and more challenges: they have to react at the moment, to deal with world full of paradoxes and to take actions in order to increase level of confidence which creates more and more instability and chaos in the society.</p>

<p> </p><p><strong>Problem: </strong>Business world has met uncertainty, which settled everywhere: from global financial markets and national economies, to organizations and employees’ minds. As every crisis, this situation came unexpectedly, almost out of a clear blue sky. Sweden, being highly dependent on international development, has faced negative effects in all aspects of business life. SMEs have emerged as an engine of economic and social development throughout the world.  As well as more than 99 percent of all enterprises in Sweden are classified as SMEs, the impact of economic crisis may be more than significant.</p><p><strong>Purpose: </strong>The purpose of the study is to investigate the impact of the current economic crisis and recession on the Small and Medium Enterprises in Sweden.</p><p><strong>Method: </strong>In order to fulfill our purpose we combined both techniques – qualitative and quantitative methodological approaches. We used a quantitative analysis tool – survey to collect primary data from the SMEs. In its turn, qualitative analysis was implemented to see how the data from earlier studies and our findings can be interconnected.</p><p><strong>Results: </strong>It was found, that companies are facing mostly negative effects. The perception of currently facing economic challenges can be assessed as anxious, which means that companies see the further development in a tough way. Damaged business confidence can be also recognized in pessimistic forecasts for profitability in 2009. However, the crisis can be considered as a driver for change. On the positive way, every downturn and faced challenge, e.g. stressful situation, stimulate organisations to analyze, look for new effective solutions and make decisions in the way they would never thought about. It was found out that importance of crisis planning is distinctly risisng during current times of uncertainty. Futhermore, companies tend to react on the faced challenges by designing, following crisis plans and creating special crisis teams.</p><p>Our research may help the businesses to understand what difficulties the majority is facing, and thus not only to prevent same risks but also turn them into opportunities.</p><p> </p>

The world was caught unprepared for the recent crisis that has gripped the globe. The engineering manufacturing sector is reported to have been one of the hardest hit and has been haemorrhaging jobs since the global economic crisis first reached South African shores. This study aimed first, to establish the presence of a global crisis and second, to determine whether this crisis is of an economic or financial nature. Objectives of the study included determining whether the engineering manufacturing sector has been impacted on by the crisis and whether the affects of this have been of a detrimental nature. This was done primarily to assess the extent to which strategies in the engineering manufacturing sector in KwaZulu-Natal have been affected and needed to be specifically adapted in order for SMEs to survive and grow beyond the current economic circumstances. Data was collected through the use of questionnaires, a typically quantitative research technique, as well as through the compilation of literature reviews. Questionnaires were circulated amongst thirty organisations within the identified sector in KwaZulu-Natal, of which twenty-two were completed and returned for analysis. Primary data was analysed in conjunction with the literature reviews. Typical responses confirmed the existence of a crisis and indicated that strategies had to be specifically adapted as a result. However, strategic alterations were often ill informed. This issue could be address through the application of the outlined models to optimise strategy. The use of these models would better enable respondents to make informed decisions when formulating their strategies and thereby assist the organisation in achieving a sustainable competitive advantage. / Thesis (M.Com.)-University of KwaZulu-Natal, Pietermaritzburg, 2012.

This master thesis is aimed towards answering the question What is the contribution from a company’s sector with regards to its survival of a financial crisis? with the sub question Can we use survival analysis on financial data to answer this?. Thus survival analysis is used to answer our main question which is seldom used on financial data. This is interesting since it will study how well survival analysis can be used on financial data at the same time as it will evaluate if all companies experiences a financial crisis in the same way. The dataset consists of all companies traded on the Swedish stock market during 2008. The results show that the survival method is very suitable the data that is used. The sector a company operated in has a significant effect. However the power is to low too give any indication of specific differences between the different sectors. Further on it is found that the group of smallest companies had much better survival than larger companies.

Pasaulio ekonomika vyksta ekonomikos ciklais, po kiekvieno pakilimo seka nuosmukis, o po nuosmukio – pakilimas. Keičiantis ekonominio ciklo fazėms, skiriasi šalių priimami sprendimai, vyriausybių vykdomos politikos, priemonės, tikslai. Tyrimo objektas – finansinių krizių poveikis ekonomikai, darbo tikslas – išanalizuoti finansinių krizių poveikį ekonomikai ir sukurti ekonomikos atsigavimo po krizės prognozavimo sistemą. Šiam tikslui pasiekti iškelti šie svarbiausi uždaviniai: ištirti pagrindines priežastis, dėl kurių kilo pasaulinės krizės, išanalizuoti pagrindines priemones, kurių buvo imtasi, norint sumažinti finansinių krizių poveikį ekonomikai, išnagrinėti ir apibendrinti užsienyje atliktų tyrimų apie finansines krizes rezultatus, atlikti ekonomikos atsigavimo po finansinės krizės prognozę Lietuvoje ir palyginti su pasaulio atsigavimu po pasaulinės finansinė krizės. Darbe pateikiamos pagrindinės finansinės ekonominės krizės nuo 1636 metų. Jos skirstomos pagal savo pradinę ar pagrindinę priežastį. Pateikiamas finansinių krizių poveikis ekonomikai bei priemonės, kurių imasi skirtingos valdžios, kad padėtų šalims greičiau atsigauti po patirtų nuosmukių. Nors teoriškai yra nesunku suvokti atitinkamas priemones, kurių reikėtų imtis užklupus ekonominiam nuosmukiui, tačiau tos pačios priemonės skirtingai reaguoja atitinkamomis aplinkybėmis ir atskirais laikotarpiais, todėl gali neduoti laukiamų ar tikėtinų rezultatų. Atlikta prognozė dažniausiai su 1-3 % paklaida atitiko... [toliau žr. visą tekstą] / The global economics goes cycle after cycle. After every boom follow recession, after every recession follow boom. Governments made different sollutions of their politics for every cycle of economics. The subject of research is the impact of financial crises on economics, the objective of the work – to sift the impact of financial crises on economics and to make the system of recovery of economics. In order to achieve this goal, are set these basics tasks: to analyse basic consequences of financial crises, to analyze basic means, which were made to recover economics, to analyze results of a few researchs, to make a forecast of recovery of economics in Lithuania and to compare with the recovery of the world. In this paper are presented basic financial crises from 1636. These financial crises are allocated related to their main reason. There are written the impact of financial crises and means, which were made by governments to help for countries and people. In theory, it is simple to know all the best means for economics, but it is difficult to practise them in specific country and situation. All means can affect economics not like it is necessary. The forecast confirm actual values with error of 1-3%. Because of this, the conclusion is made, that predictive values in 2010 happened in the world and in Lithuania too. The paper consists of three parts. The size of this paper is 45 pages. There are 6 tables and 14 pictures in this paper. 52 sources of literary are used.

As harmful as the financial crisis of 2007-2009 was, some organizations professed some benefits as a result; “we know our risks better,” “we can better manage risks.” Many of the organizations that hailed such positives undoubtedly had what would generally be considered sound risk management systems/practices (RMS). So, what happened? What prevented organizations RMS from perhaps better mitigating risk during the recent financial crisis than was the case? Said another way, “what are barriers to effective risk management?” This study proposes a risk governance framework (RGF) that helps distinguish phases of RMS, and is grounded in Risk principles versus a controls based foundation that many view as part of the current problem with RMS. Based on our survey of 41 Risk Managers (RM) and 96 Regulators (REG), we obtained perspectives on barriers to effective risk management including barriers to effective risk management leading up to the financial crisis of 2007-2009, the importance of Risk principles, and suggestions to improve the effectiveness of RMS. We also obtained RM and REG perspectives of the impacts to RMS from our banking environment providing a type of “insurance,” impacts to RMS due to perceptions of the state of the financial/economic environment, how complete must phases of RMS be, compensation practices and its impacts to RMS, and the notion of quantitative/qualitative methods in current RMS. Leading up to the financial crisis of 2007-2009, identified barriers to effective risk management include a lack of risk culture and under estimating risks. Some suggestions to improve RMS include improving the risk function and developing more dynamic, forwarding looking and preemptive risk management tools and techniques that blend quantitative and qualitative methods. The proposed RGF and the rich context on barriers to effective risk management obtained from our study may help practitioners and academia alike in considering ways to analyze and improve RMS.

The following dissertation contains two distinct empirical essays which contribute to the overall field of Financial Economics. Chapter 1, entitled “Financial Inclusion and Economic Development in OIC Member Countries,” examines whether the presence of Islamic finance promotes development and alleviates poverty. To do so, we estimate the influence of financial inclusion variables on development and poverty variables for OIC countries. Using data from the World Bank, we use dynamic panel analysis using methodology similar to Beck et al (2000) to study the effects of financial inclusion on economic development and use simple cross-sectional analysis similar to Beck et al (2004) to study the effects on poverty alleviation. We find that the countries with Islamic finance tend to outperform the rest of the world. We believe that the ability of financial institutions offering Shari’a compliant services to bring otherwise excluded people under the financial system plays a major role in increased development and reduced poverty in those countries. The results support our view that financial inclusion is causing development. Chapter 2 entitled, “Asymmetric Market Reactions to the 2007-08 Financial Crisis: From Wall Street to Main Street,” examines the impact of significant news events during the 2007 – 2008 financial crisis on the abnormal stock returns for portfolios of financial and real sector firms. We recognize 17 significant news events from 2007 and 2008 and create equity portfolios using daily CRSP data from January 1, 2006 to December 31, 2009. We estimate event announcement interval abnormal returns in the context of an asset pricing model similar to Fama and French (1993) and Carhart (1997). We document significant negative abnormal returns for the portfolio of non-financial firms, and the smallest firms exhibit the largest negative abnormal returns, an indication of a significant spillover of financial market news to real sector stock returns. Smaller financial firms also exhibit negative abnormal event returns, and these results are driven by broker-dealer, depository, holding-investment, and real estate firms. The results provide new evidence regarding the incorporation of news events into asset prices during financial crises.

This thesis deals with the globalization of production, a salient feature of the modern economy. The development of international outsourcing as a widespread business practice and the simultaneous decrease in trade and transport costs have contributed to the growth of a phenomenon known as global value chains. The main aim of the thesis is to understand how global value chains alter the location of economic activity. The thesis also studies the extent of firms' participation in global value chains and its consequences for firm performance.   The thesis consists of four papers studying the behavior of firms in global value chains. Paper 1 analyzes how production fragmentation influences the importing and exporting behavior of Swedish firms in the manufacturing sector. Paper 2 focuses on manufacturing firms in the ICT sector and analyzes the effect of global sourcing on firm performance. In Paper 3, the thesis examines deeper implications of global production by investigating whether exposure to trade raises firms' sensitivity to external shocks. The final paper in the thesis studies the location patterns of multinational firms and analyzes the effect of institutional distance on the number of multinational entries in developing countries.   A number of patterns emerge from these studies. The first is that Swedish manufacturing firms increasingly participate in global value chains by sourcing production inputs from overseas to create products for local and foreign customers. As a result, global value chains help to alter the specialization patterns of manufacturing firms. The second finding is that firms reap benefits from global sourcing in the form of greater efficiency. However, global sourcing may also raise the responsiveness of firms to negative external shocks. The final key result points to a developing trend in the location of activity in which emerging market multinational firms are becoming significant sources of foreign direct investment flows and their investment patterns challenge existing theories of multinational location choice.

Corporate investment decisions are among the most important decisions of a firm. Internal capital markets play a key role in facilitating the allocation of capital resources in order to finance investment projects within diversified firms. This thesis investigates internal capital markets and its relationship with analysts earnings forecast errors in three countries with two distinct financial systems, namely, the market-based and bank-based financial system. Using segment level data for public listed companies in the UK, France and Germany between 2005 and 2010, we examine the operation and efficiency of internal capital markets in market- and bank-based systems. We also examine the impact of the financial crisis of 2008 on internal capital markets and analysts earnings forecasts errors, namely, the accuracy, bias and dispersion. The findings indicate internal capital markets actively facilitate the allocation of resources within diversified firms and, in general, operate inefficiently. Furthermore, internal capital markets appear to be more active in France compared with the UK. On the other hand, their role appears to be limited in Germany, as segments appear to rely more on their own resources and less on internal capital markets for investments. In addition, we find that internal capital market activity declines and efficiency improves during the financial crisis in UK. In contrast, there is no significant evidence to suggest that efficiency improves during the crisis in France or Germany. This research also finds some evidence to suggest internal capital markets operations aggravate firm complexity and, in turn, negatively affect short-term forecast accuracy in the UK. In addition to this, our analysis shows there is a positive relationship between the size of internal capital markets and dispersion in analysts earnings forecasts. In general, our study shows analysts are optimistic about firms future performance; however, the level of optimism significantly declines during the financial crisis. Lastly, we report a positive relationship between efficiency of internal capital markets and optimism in earnings forecasts.