Financial sustainability of a globalised economy in the context of the mechanism of the spread of crisis

Piotr Komorowski ()
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Piotr Komorowski: Institute of Sociology, Faculty of History and Social Sciences, Cardinal Stefan Wyszyński University in Warsaw, Poland

CES Working Papers, 2018, vol. 10(1), issue 1, 67-78

Abstract: Financial sustainability of an open economy is a very current and complex issue. In today's global conditions the flow of streams of capital, people, labour, goods, materials, etc. are controlled in a very small degree by countries and its direction depends on exogenous factors. Such conditions allow the free transfer of economic processes within the globalised economy. These processes can generate desirable, positive effects or undesirable, negative effects to the country's economy. Under these circumstances it is important for the internal economy, and the financial system, to possess the ability to resist the destabilizing processes, especially during their particular intensity during a crisis. Given the fact that the initial crisis processes spread through financial markets, and primarily affect the financial system, it's resistance to destabilisation is the most important security buffer for the real economy to maintain growth. Therefore, the sustainability of the financial system in an open economy during a crisis is a crucial factor for the stability of the whole economy. This article discusses the role of the financial system of an economy in absorption of the external crisis processes. Furthermore, in the article the author analyses the specific course of an economic crisis phenomenon in the global conditions. Correct identification of the development of the crisis is crucial for building the economy's resilience to the crisis effects.

Keywords: crisis; crisis life cycle; financial sustainability; safety network; financial system; contagion of crisis; transmission of crisis (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:jes:wpaper:y:2018:v:10:i:1:p:67-78

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