Causes and Potential Concepts for solving the World Financial crisis Cover Image
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Узроци и могући концепти решавања светске финансијске кризе
Causes and Potential Concepts for solving the World Financial crisis

Author(s): Oskar Kovač
Subject(s): Economy
Published by: Nova srpska politička misao
Keywords: financial crises; economic recession; causes and possible solutions

Summary/Abstract: The inability of neoclassical theory to discern the causes of economic and financial crises comes from unrealistic assumptions about rational behavior of manufacturers and consumers and the market functions perfectly. The very fact that these conditions have not been fulfilled explains most economic and financial crises. Financial crises are usually results of bad deregulation of significantly imperfect financial markets, which prevented authorities to impose responsible behavior on commercial banks, based on prescribing the ratio of their own capital and asset exposure. Full-scale rescuing of insolvent major banks in developed countries without a reform of the financial system will cause even worse crises in the future. There search for a solution is moving on two tracks. A group of twenty countries tends to create global solutions without consulting other countries. At the same time, the United Nations, which represent the entire world community, are doing the same. Due to different interests of major countries and long legislative procedures, neither of these solutions will be applied until the next crisis arises.

  • Issue Year: 17/2009
  • Issue No: 03+04
  • Page Range: 7-24
  • Page Count: 18
  • Language: Serbian