CONTAGION PHENOMENA RESEARCH AS A METHOD OF FINANCIAL CRISIS MANAGEMENT

Victoria Cociug () and Denis Malendra ()
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Denis Malendra: National Institute for Economic Research, The Academy of Sciences of Moldova, The Ministry of Education, Culture and Research, Republic of Moldova

Contemporary Economy Journal, 2019, vol. 4, issue 1, 49-54

Abstract: The effect of the financial crisis, triggered in 2008, is currently perceived at the level of the economic system, although the financial system has already recovered. The causes of the financial disaster were multiple, but it is undeniable that due to strong strong inertia between the components of the financial system, but more with the cell, the crisis spread much faster than in previous crises. Interconnections in the banking system are a necessity, as not all institutions are specialized at the same time in attracting funds in the form of deposits and their use in crediting the economy. Some institutions are specialized in attracting deposits, others only in lending and must be regarded as essential elements that ensure redistribution of liquidity within the system, from surpluses to deficits. But these fund transfers are risk-taking, especially credit, which can cause contagion to the whole system and the loss of solvable banks that have not been able to assimilate the perceived risk from other banks with major financial problems. In order to prevent the emergence of a systemic risk, it is necessary to develop a mechanism to assess the system's vulnerability to the risks generated within the system and to the contagion effect in order to set maximum exposure limits to system elements through effective regulatory rules. This article aims to investigate the contagion phenomenon within a banking sector and how it can be delivered more quickly when there are strong economic relationships and interdependencies between the banks. It was found that contagion is not a local issue and should not be treated as it is, but it is much broader, expanding on more than one region, so it is important to find correlations between countries in order to reduce its effect, that financial markets have underestimated the risk and degree of interdependence between countries.

Keywords: central bank; inflation; monetary policy; inflationist expectations (search for similar items in EconPapers)
JEL-codes: E31 E32 E52 E58 (search for similar items in EconPapers)
Date: 2019
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