Business and Finance Lectures

Posts Tagged ‘Financial Stability’

Is to call attention to how the dollar of late has been picking up, so much so that governments and investors have been buying large amounts of that currency.
Who would imagine that after what happened in July last year, when the dollar suffered its worst slump against the euro, we have seen that from that date to today, according to several analysts, the value has reached a recovery of 24% against the currency of the European Union.
Already in 2001, to be precise from March to November of that year, a considerable downturn, and despite this, governments and investors will bet that the dollar would have a recovery, which was gradually giving.
However, in spite of the recovery of the dollar against the euro currency in Asian markets like Japan, Korea, Singapore, the currency has been pushed mainly by the China currency, the yuan, which is denotes more in trade.
However, the dollar after touching minimum, began a recovery, which in no way has been because the U.S. had regained confidence and initiate a recovery in the economy, but the financial crisis has become so widespread, it has been precisely in the countries of the European Union where there has been more affected, suffering heavy damage, so much so that the European Central Bank had to reduce their interest rates, which meant accepting the onset of recession in that area.
Having been in the dollar against the euro, 1.60 dollar per euro in 1999, in December 2008 and was trading 1.44 per euro and to date has been fluctuating between 1.20 to 1.21 and $ 1.30 per euro.

After the balance can devise strategies for better management:

• To decide what to spend. It is important to agree to spend less than you earn. To avoid financial problems, most healthy is moderation in household expenses and save money over.

• What about debts? When you have debts, and liquidate completely at one time is not always as convenient as it can destabilize the liquidity of the family and leave it unprotected in the event of a sudden. A good strategy is to repay debts gradually and when surpluses in household expenditures rather than liquidate the debt in full and remain at zero, you can open a savings account to prevent eventualities. When debts are controlled need not affect financial stability.

· The joint bank account. When it comes to a family where most members have the maturity to make good decisions, joint checking accounts may be a good financial instrument that allows greater control. Such accounts allow us a more detailed record of our operations since in the book are recorded the checks issued to the amounts and beneficiaries.

• Plan to medium and long term. When all the members involved, it is easier to start planning the future. The family must set goals and express their hopes and dreams for the future. Parents can create awareness among children about the importance to start saving as soon as possible thinking about events in the medium and long term such as college education or retirement.

· Insurance of life. It also talk about life insurance and will. Although it is very difficult to think about issues related to injury or death in the family, it is important to inform the family about the measures taken to protect the assets even before the eventualities of life.

We exploit a panel of 72 U.S. dollar-denominated bonds issued by Latin American Publicly listed FIRMS Between 1996 and 2005 to answer the Following three questions: a) is Sovereign Risk and statistical an Economically Significant Determinant of the corporate credit spread, controlling for firm and Characteristics specific bond?, 2) If yes, do market participants Apply the rule ADOPTED by Sovereign ceiling rating agencies in the pricing of Our bond market data?, and 3) how do market views compare with the rating agencies Each ceiling for corporate policy? We find strong evidence of an Economically and Statistically significant effect of Sovereign Risk on corporate spreads across Different panel Econometric specifications and bonds. Moreover, markets do Not Apply the ceiling rule in 77% to 90% of the sample and bonds we are These Findings Consistent with rating agencies’ Policies Towards the Latter for about 50% of the FIRMS.

Speaker: Dr. Martin Grandes
Director and Research Professor, Centre for Applied Business School Professor UBA UCA, former Executive Director of the Center for Financial Stability exDecano School of Government at American University in Paris and worked in international organizations, OECD, BIS, ECLAC.