rediff.com

NewsApp (Free)

Read news as it happens
Download NewsApp

Available on  

Rediff News  All News 
Rediff.com  » Business » 'Present global crisis is comparable to Lehman shock of 2008'

'Present global crisis is comparable to Lehman shock of 2008'

Last updated on: December 11, 2012 14:41 IST

'Present global crisis is comparable to Lehman shock of 2008'

     Next

Next
Gurdip Singh in Singapore


The present financial crisis in Europe and other countries is affecting Asian economies not just through trade or slower Asian exports, but through financial channels and can be compared to the Lehman shock of 2008, a senior ADB economist said on Tuesday.

"Our findings show this (the financial crisis) is quite significant compared to the Lehman shock. There is the spillover affect (which is) statistically quite significant in some Asian countries," Iwan Azis, the head of Asian Development Bank (ADB) Office of Regional Economic Integration told PTI.

It may be recalled the 158-year-old Lehman Brothers had filed for bankruptcy protection in 2008 after losing billions of dollars in the real-estate market.

Click NEXT to read more...


Image: Christie's employees pose for a photograph with a Lehman Brothers sign at Christie's in central London
Photographs: Andrew Winning/Reuters

     Next

'Present global crisis is comparable to Lehman shock of 2008'

Prev     Next
Prev

Next

"The spillover effect of the American slowdown and the European crisis on the Asian financial markets is significant in some countries, including on Chinese bonds, he said.

Azis, who also teaches at Cornwell University in the US, said these latest findings come from an ADB study titled "Decoupling or Spillover? Capital Flows Volatility and Financial Contagion in Asia" which was discussed at a seminar in Singapore last week.

Cautioning the Asian economies, Azis, said they should build strong financial safety net at regional level against the spillover impact from the European and US financial crisis, which are significantly coming through capital flows and bond markets.

Click NEXT to read more...


Image: A worker walks past inside the Asian Development Bank (ADB) headquarters in Manila
Photographs: Cheryl Ravelo/Reuters

Prev     Next

'Present global crisis is comparable to Lehman shock of 2008'

Prev     More
Prev

More

He also noted the increase in European and US capital flow to Asian markets was due to better yields as a result of virtually nil returns in their home markets.

But again, he called for a better management of the capital flow, especially regulatory measures to ensure such capital flow was held for a period of six months to nine months to protect the Asian markets.

A sudden stop and reversal of capital flow or hot money would hurt the Asian markets, he said.

ADB economist Sabyasachi Mitra pointed out Indonesia had already set up regulatory mechanisms years ago to hold capital flow for a period of six months to nine months for maintaining capital stability.

Such measures were now supported by the International Monetary Fund for economic stability though it had not done so in the past for freer economies, he said.


Image: Visitors are silhouetted against the logo of the International Monetary Fund at the main venue for the IMF and World Bank annual meeting in Tokyo
Photographs: Kim Kyung-Hoon/Reuters

Prev     More
© Copyright 2013 PTI. All rights reserved. Republication or redistribution of PTI content, including by framing or similar means, is expressly prohibited without the prior written consent.