The Origins of the Global Financial Crisis and Its Impact on Romanian Economy

Corina Sbughea

Economics and Applied Informatics, 2011, issue 1, 107-112

Abstract: Asymmetric information theory says that individuals who cooperate in different situations have different levels of knowledge on a subject. The main role of a financial system is to direct funds to individuals and companies that have good money investments. To do this correctly, participants in financial markets should be able to make correct opinions on which investment opportunities are in some measure efficient. This is where the problems of information asymmetry occur: moral hazard and adverse selection. So financial crisis are triggered when these problems become particularly acute, and financial markets are unable to perform this crucial role of channeling funds to those who have the most efficient investments. Recent financial crisis, triggered in the U.S. and spread globally, has not spared Romania, and the present paper tried to highlight its main effects on our economy.

Keywords: Information asymmetry; Moral hazard; Adverse selection; Financial crisis; Default rate (search for similar items in EconPapers)
JEL-codes: E20 G10 G14 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ddj:fseeai:y:2011:i:1:p:107-112

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