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Financial crisis enforcing global

banking reforms
A. Gupta

A. Gupta is an Associate Introduction

Professor at PGDAV
College, Delhi, India.
One of America’s biggest investment banks, Lehman Brothers, collapsed and triggered a
chain reaction of economic, financial and psychological crisis which very soon engulfed the
entire globe. The year 2008-2009 turned out to be a year when hard-hit by the global
financial crisis, the worldwide banking industry’s future development has been sharply
drawn into focus. Recognizing that repairing the financial system remains a key priority, the
rescue measures were undertaken globally. These have contributed to an avoidance of
‘‘worst case scenarios’’, in particular by reducing the default risk of major banks. The ‘‘global
financial crisis’’ of 2008, also called as global financial meltdown, global financial turmoil
mainly resulted from the sub prime mortgage crisis of 2007.
Sub prime lending crisis, which began in the US has become a financial contagion and has
led to a restriction on the availability of credit in world financial markets. Hundreds of
thousands of borrowers have been forced to default and several major sub prime lenders
have filed for bankruptcy. Initially the companies affected were those directly involved in
home construction and mortgage lending such as Northern Rock and Countrywide
Financial. Financial institutions (FIs) which had engaged in the securitization of mortgages
such as Bear Stearns then fell prey. On July 11, 2008, the largest mortgage lender in the US
collapsed. Indy Mac Bank’s assets were seized by federal regulators after the mortgage
lender succumbed. Thereafter, US government saved mortgage lenders Fannie Mae and
Freddie Mac, by placing the two companies into federal conservator ship on September 7,
It then began to affect the general availability of credit to non-housing related businesses
and to larger FIs not directly connected with mortgage lending. Exposure to these
mortgage-backed securities, or to the credit derivatives used to insure them against failure,
threatened an increasing number of major FIs. Beginning with bankruptcy of Lehman
Brothers on Sunday, September 14, 2008, the financial crisis entered an acute phase
marked by failures of prominent American and European banks and efforts by the American
and European governments to rescue distressed FIs.
The general economic slowdown that ensued in the later stages of the crisis, in particular
after the global crisis of confidence in September and October 2008, meant that bank losses
became more closely connected to macroeconomic performance. In this period, the
majority of write downs were more directly linked to a surge in borrower defaults and to
anticipated defaults as evidenced by the increase in the amount and relative importance of
provisioning expenses. Credit costs are likely to continue on an upward trajectory as
weakening economic activity will probably impair the private sector’s ability to service debt.
Rating agencies expect corporate default rates to increase further. The magnitude of the
actions taken to support the banking system as a fall out of the global financial crisis has
been unprecedented.

PAGE 286 j BUSINESS STRATEGY SERIES j VOL. 11 NO. 5 2010, pp. 286-294, Q Emerald Group Publishing Limited, ISSN 1751-5637 DOI 10.1108/17515631011080696
The paper deals with the following sections: reasons of the crisis; fiscal implications of the
crisis; transmission of the crisis to the Indian economy; global banking ranking; new
challenges; key areas for global integration; recommendations; conclusion.

Reasons of the crisis

Bets tied to residential real estate
A large number of banks and other major intermediaries managed to increase risks by
exploiting loopholes in regulatory capital requirements to take a highly leveraged, one-way
bet on the economy. Particularly popular were bets tied to residential real estate, but also to
commercial real estate, and consumer credit. They bet the farm on the persistence of
favorable economic and financial conditions. When things went wrong, banks had no capital
cushion to bear the risk. Many were so large that there were no easy bankruptcy procedures
nor any way of ensuring they continue to perform their financial plumbing while in
bankruptcy. Of course, they were bailed out. These bet were financed largely by lenders –
for example, by insured depositors and the uninsured large creditors of Fannie Mae, Freddie
Mac. The too-big-to-fail banks also lent. Due to government guarantees, all these lenders
were more or less indifferent to the consequences of things going wrong. Guaranteeing the
liabilities of large financial firms offers them an unfair advantage, because they can raise
capital at a lower cost. Because the guarantee is so valuable and pervasive, these firms face
little market discipline and have a perverse incentive to expand their scope, scale, risk
exposure, leverage, and interconnectedness.

Role of proprietary trading

Proprietary trading is ‘‘used in banking to describe when the firm’s traders actively trade
stocks, bonds, currencies, commodities, their derivatives or other financial instruments with
its own money as opposed to its customers’ money, so as to make a profit for itself’’[1].
Consider the AAA-rated trenches of mortgage-backed securities held by banks. These were
effectively a way to manufacture the tail risk on the economy but were originally intended for
marketing to the now-proverbial Norwegian pension fund. But banks were never fully
successful in this intended purpose.
Some of the trenches remained in the ‘‘warehouse’’ of banks. After all, such trenches paid a
nice ‘‘carry’’ (i.e. premium) due to the aggregate nature of their risk, their illiquidity, and the
low-cost of short-term debt with which they were financed. Banks soon converted the
warehouse into a ‘‘principal’’ or prop-trading activity, allocating capital to build-up of more
exposure. When the trenches lost money, the tremendous leverage built in them brought
down these institutions, but they were too big to fail and were bailed out. Lehman Brothers
was the exception that proved the rule – its failure underscored the exact meaning of ‘‘too
big to fail’’. While limits on the proprietary trading activity of major commercial banks could
play a role in reducing their probability of failure, and thus of cost to the taxpayer, we cannot
ignore the systemic risks and volatility which can be created by nonbank FIs which are
heavily involved in trading activities particularly if they take majority transformation risks.
Lehman Brothers was not a deposit- taking bank, but its failure still provoked the extreme
stage of the crisis.

Fiscal implications of the crisis

The impact of the crisis on public finances is substantial: the increase in government debt
(as a share of GDP) in advanced economies is projected to be the largest and most
pervasive since the second world war. And this increase is taking place against the
background of preexisting long-run pressures from pension and health care spending,
especially in countries that will soon experience a rapid shift toward an older population.
Governments have had little choice but to intervene to save the financial system from
collapse, and to provide fiscal stimulus to counter the sharp contraction in private sector
demand. It is not difficult to imagine a scenario in which higher interest costs and lower

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economic growth snowball into even higher debt-to-GDP ratios, ultimately leading investors
to raise questions about the sustainability of government finances around the world. So far, in
general, this has not happened (although credit default swap spreads have been on the up
tick in many countries), and the perceived likelihood of default remains small. But because
investor confidence in governments’ creditworthiness has been key in preventing a
complete meltdown of the financial and economic system, preserving such confidence is of
paramount importance.

Mounting direct costs and liabilities

The unprecedented scale and nature of the financial crisis have prompted policymakers to
be remarkably inventive in their efforts to support troubled FIs and markets. These
interventions have essentially involved capital injections, asset purchases, or direct lending
or guarantees by governments or central banks. In most cases, operations undertaken
directly by governments have led to increases in gross public debt, though not necessarily a
change in net worth or the overall deficit, after taking into account the elated acquisition of
assets – at least to the extent that specific asset transactions reflect actual market value,
without any subsidy element.

Fiscal stimulus
Faced with the economic slowdown, many countries have announced fiscal stimulus
packages. The headline numbers have in some cases been truly impressive. However, with
governments under pressure to be seen providing help to their citizens, it is important to
distinguish between headline numbers provided to the press and actual facts by keeping
track of how many of the measures are genuinely additional to what would have already
been contained in budgets for the next year. In some cases, the differences are substantial.
Correcting the data for these factors, the fiscal stimulus is somewhat smaller, but still
significant. For example, it amounts to 1.5 percentage points of GDP, on average, for the
G-20 countries in 2009.

Other fiscal implications of the crisis

B The global slump in economic growth triggered by the financial crisis also has adverse
consequences for government revenues through the operation of automatic stabilizers. If
economic activity recovers relatively soon, the impact of lower revenues should not raise
major concerns. But should the slowdown turn into a prolonged recession, the impact for
the sustainability of public finances would be far more severe.
B In addition, larger nondiscretionary effects of the crisis have resulted from the collapse in
equity and housing prices, and financial sector profits; this has caused a sharp decline in
tax revenues on items such as capital gains and corporate profits.
B Further, to the extent that the collapse in commodity prices may be attributed to the
worldwide economic growth slowdown, another adverse effect – for commodity
producers – is the sharp decline in revenues linked to commodities.
B Losses suffered as a result of the asset price collapse have also been substantial for
funded pension systems (both public and private), and it is possible that public pressures
will emerge for the state to compensate pension system participants adversely impacted
by the crisis.

Transmission of the crisis to the Indian economy

With India’s increased linkage with the world economy, India could not be expected to
remain immune to the global crisis or be decoupled from the global economy. While it is true
that the Indian banking sector remained largely unaffected because of its very limited
operations outside India or exposure to sub-prime lending by foreign investment banks, the
global crisis has affected India through three distinct channels. These channels are financial
markets, trade flows, and exchange rates. The financial sector includes the banking sector,
equity markets (which are directly affected by foreign institutional investment flows), external

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commercial borrowings that drive corporate investments, Foreign Direct Investment (FDI),
and remittances. The global crisis had a differentiated impact on these various sub-sectors
of the financial sector.
Given prudent regulations and a proactive regulator, the Indian banking sector has
remained more or less unaffected, at least directly, by the global crisis. The imposition by the
Reserve Bank of India (RBI) of a higher provisioning requirement on commercial bank
lending to the real estate sector helped to curb the growth of a real estate price bubble. This
is one of the few global examples of a countercyclical capital provisioning requirement by
any central bank. In general, Indian banks were not overly exposed to sub-prime lending.
Only one of the larger private sector banks, ICICI Bank, was partly exposed but it managed
to thwart a crisis because of its strong balance sheet and timely action by the government,
which virtually guaranteed its deposits. The banking sector as a whole has maintained a
healthy balance sheet. In fact, during the third quarter of FY2008, which was a nightmare for
many big FIs around the world, banks in India announced encouraging results. Against an
absolute decline in the profitability of non-financial corporate enterprises, the banking sector
witnessed a jump of 43 percent in its profitability. A ban on complex structures like synthetic
securitization coupled with a close monitoring of appropriate lending norms by RBI also
ensured a better quality of banking assets. The non-performing assets as a ratio to gross
advances have remained well within prudential norms. Further, with an average capital risk
weighted assets ratio of 13 percent, Indian banks are well capitalized and better placed to
weather the economic downturn However, the indirect impacts of the crisis have affected
Indian banks quite badly. The liquidity squeeze in global markets following the collapse of
Lehman Brothers compelled Indian banks and corporations to shift their credit demand from
external sources to the domestic banking sector. This move exerted a lot of pressure on
liquidity in the domestic market and consequently short-term lending rates shot up
abnormally. The credit crunch, coupled with the loss of confidence that followed the Lehman
Brothers episode, increased the risk aversion of Indian banks and eventually hurt credit
expansion in the domestic market.. The magnitude of the impact of the crisis can be
understood from the fact that non-food credit expansion during last five months of
FY2008-2009 has declined by more than 68 percent as compared with the same period in
previous financial year.

Global banking ranking

The World Economic Forum analyzes 110 economic indicators in 12 different categories for
each of 134 countries to come up with its overall Global Competitiveness Index (GCI)
ranking. One of those 12 areas is financial market sophistication, which is made up of factors
such as ‘‘venture capital availability’’, ‘‘strength of investor protection’’ and even ‘‘regulation
of securities exchanges’’. But perhaps the most important factor in this category is the
soundness of banks.
Confidence in a nation’s banks is what keeps citizens from stuffing dollars under a mattress.
Banks need deposit assets to keep the wheels of industry turning, as deposit assets are
used to fund the short-term credit markets that are so vital to the daily operations of many
corporations. And it is an area where the USA ranks a disappointing 40th. Coming in behind
such well-developed nations as Canada, which tops the list, or even Hong Kong in the 11th
spot, might not seem so bad. But even the small African nation of Namibia ranks in at 17th,
illustrating the USA has some definite room for improvement. While there are plenty of
surprises at the top of the bank safety list, there are not many such surprises at the bottom.
Algeria comes in dead last with Libya just above it.
Of the ‘‘BRIC’’ nations – Brazil, Russia, India and China – most moved up the list this year
against better-developed nations. China landed in the top 30 for the first time as it moved up
four spots to reach 30, but China’s banking system is still near the bottom of the list at 108.
India, however, slipped two spots to 50 from 48 due to a widening budget deficit. India’s
banks also slipped, falling to 51 from 46. Meanwhile, Brazil was the biggest mover with an
eight-spot jump to 64 on the overall list, and also tops the USA when it comes to the
soundness of its banks with its 24th spot on the banking safety list. Oil revenues gave Russia

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a gain of seven to move to 51 from 58 the year prior, but Russia’s banks clocked in at 107 on
the soundness rankings.

New challenges
While the current global economic crisis points to the need to reinforce the ongoing
initiatives, recent events also further challenge economic statisticians to come up with fresh
data initiatives, particularly in four key areas. The new areas that need attention are:
B Sectoral balance sheet data. The availability of data on the assets and liabilities of
non-bank FIs, Non financial corporations, and the household sectors needs to be
improved. The crisis highlighted the need to capture activity in segments of the financial
sector where the reporting of data is not well established and in which sizable risks may
have developed. Non-financial firms have had unexpected vulnerabilities arising from, for
example, derivative and foreign currency exposures. Housing assets on household
balance sheets and the impact of house prices on household net worth have been highly
relevant to the current crisis despite progress in some countries. In the public sector
(including central banks), the costs resulting from intervention in response to the crisis
need to be appropriately and transparently recorded, and reported in both gross and net
terms. A solid accounting framework (along the lines of the public sector accounting
principles, which are compatible with the IMF’s Government Finance Statistics Manual
(GFSM), 2001) is a core building block. The IMF is monitoring the scale of announced
interventions by country and recommends wider use of the GFSM framework.
B Ultimate risk/credit risk transfer framework. The crisis has highlighted the complexities in
analyzing the spread and transfer of risk and in finding out how much debt is out there.
The issues include capturing the activity of special purpose entities and
off-balance-sheet operations and assessing the transfer of risk through instruments
such as credit default swaps and derivatives. In addition, structured products such as
collateralized debt obligations and asset-backed securities mask where the risks in the
system lie. Work is under way in the statistics department on capturing off-balance-sheet
items for financial corporations, but there is a need to build on existing experience to
develop a meaningful framework in which to undertake such work.
B Data to monitor developments in housing markets. The changes in housing prices and
markets and their impact on the economic behavior of households and FIs were central to
recent economic developments in many countries. Although for some countries there is
plentiful information, this is not universal, despite the increasing importance of this market
in many countries.
B Leverage and liquidity. The high levels of leverage (assets to capital) that built up in the
economic system and the de linking of financial cross-border from real activity for
industrial countries are another feature of the recent crisis. Liquidity risk has also been
highlighted by the crisis. Within economic statistics, original maturity has always been
favored as the measure of maturity, but with the problems faced by many institutions when
the flow of capital suddenly dried up, greater attention needs to be given to remaining
maturity measures, more clearly identifying rollover risk.

Areas for global integration

In the wake of the crisis, policymakers around the world are looking for ways to fix the
international financial system: how to better regulate banks and other FIs, how to more
effectively address risk, and how to strengthen economic cooperation. The following are the
key areas for international integration:
B Raising the quality, consistency and transparency of the capital base. This will ensure that
the banking system is in a better position to absorb losses on both a going concern and a
gone concern basis. In addition to raising the quality of the Tier 1 capital base, the
Committee is also harmonizing the other elements of the capital structure.

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B Strengthening the risk coverage of the capital framework. In addition to the trading book
and securitization reforms announced in July 2009, it is proposed to strengthen the
capital requirements for counterparty credit risk exposures arising from derivatives, repos
and securities financing activities. The strengthened counterparty capital requirements
will also increase incentives to move Over the Counter (OTC) derivative exposures to
central counterparty and exchanges. There is need to promote further convergence in the
measurement, management and supervision of operational risk.
B Introducing a leverage ratio as a supplementary measure to the Basel II risk-based
framework with a view to migrating to a Pillar 1 treatment based on appropriate review and
calibration. The leverage ratio will help contain the build-up of excessive leverage in the
banking system, and introduce additional safeguards against model risk and
measurement error. To ensure comparability, the details of the leverage ratio will be
harmonised internationally, fully adjusting for any remaining differences in accounting.
B Introducing a series of measures to promote the build-up of capital buffers in good times
that can be drawn upon in periods of stress. A countercyclical capital framework will
contribute to a more stable banking system, which will help dampen, instead of amplify,
economic and financial shocks. In addition, the committee is promoting more
forward-looking provisioning based on expected losses, which captures actual losses
more transparently and is also less procyclical than the current ‘‘incurred loss’’
provisioning model.
B Introducing a global minimum liquidity standard for internationally active banks that
includes a 30-day liquidity coverage ratio requirement underpinned by a longer-term
structural liquidity ratio. The framework also includes a common set of monitoring metrics
to assist supervisors in identifying and analyzing liquidity risk trends at both the bank and
system wide level.
B Issue recommendations to reduce the systemic risk associated with the resolution of
cross-border banks.

Building on the lessons of the crisis here are the recommendations to improve the resolution
of a failing FI that has cross-border activities:
B Regulating systemic risk. From an economic point-of-view, the best solution to contain the
excessive systemic risk created by too-big-to-fail institutions is to charge them upfront for
the implicit taxpayer guarantees they enjoy. They should pay a fee both for their expected
losses in the event of failure and for expected losses when failure occurs in the context of
a systemic crisis (which could be broadly defined as the financial system as a whole
becoming undercapitalized). Indeed, such a structure of the fee can be shown to be
optimal in a setting where there is a negative externality on the real sector whenever there
is a systemic crisis. The key point is that, when faced with these fees, the FI will on the
margin choose to hold more initial capital (i.e. be less levered), take less risky positions
and organically choose to become less systemic.
B Separating proprietary trade. Separating commercial banking from proprietary trading is
a way of containing the moral hazard arising from government guarantees – not just from
actions of financial firms that receive the guarantees, but through competitive pressures,
also through actions of other firms in the financial sector. The point is that when risks are
not perfectly seen – and new ones are created (‘‘innovated’’) by banks to get around any
restricting regulation – a blunt isolation of the government guarantees provides an
additional firewall against systemic risk.
B Information transparency. Data dissemination standards can enhance the availability of
timely and comprehensive statistics, and so contribute to the design of sound
macroeconomic policies. The IMF has taken several steps to help enhance information
transparency and openness – including the establishment and strengthening of data
dissemination standards – to help member country policymakers prevent future crises

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and diminish the effect of those that occur.
The standards for data dissemination consist of two tiers, the special data
dissemination standard (SDDS) and the general data dissemination system (GDDS).
The SDDS was established in 1996 to guide emerging market economies that have, or
might seek, access to international capital markets, while the GDDS was established in
1997 to help countries provide more reliable data. Both are voluntary, but once a country
subscribes to the SDDS, observance of the standard becomes mandatory. Countries
must also agree to post information about their data dissemination practices on the IMF’s
external website on. Dissemination standards bulletin board (DSBB), and establish an
Internet site containing the actual data, called a National Summary Data Page, to which
the DSBB is linked. The IMF notes that approximately 81 percent of its membership
participates in the new data initiatives.
B Creating a robust and resilient financial system. The presence of a sound financial system
– comprising banks, security houses, securities exchanges, pension funds, insurers, and
alternative investment vehicles – is essential to support sustainable economic growth
and development, and the role of the central bank and national supervisors/regulators is
critical in promoting financial stability to achieve stable, sustainable growth of the world
economy it is necessary to facilitate information exchange among major financial centers
and strengthen international cooperation on financial market supervision and
B Capital flow management. Economies with relatively open capital accounts face the
challenge of managing potentially volatile and procyclical capital flows. Large and rapid
inflows of mobile capital can suddenly stop or even reverse themselves and, thus,
threaten domestic macroeconomic and financial-sector stability. The authorities may use
a combination of several policy options to contain or mitigate the impact of large,
disruptive capital inflows. They may, for example: accumulate foreign exchange reserves
through sterilized interventions, as a short-term measure to cushion the impact of future
reversals of capital flows; introduce greater exchange rate flexibility, leading to currency
appreciation and stemming speculative inflows; encourage capital outflows, to lessen the
upward pressure on the currency and the need for costly sterilized interventions. There is
no silver bullet solution, and policymakers need to find the best combination for their
countries given the specific country conditions.
B Internationalization of currencies. Emerging economy governments are often cautious in
internationalizing their currencies as traders can use offshore markets for speculative
activities. Policymakers should apply an integrated set of rules and regulations to prevent
an overly active offshore market for domestic currencies, with the support of international
organizations where appropriate choice of an exchange rate regime.
B International rules for external debt restructuring and cross-border insolvencies.
Establishing an international collective framework for an orderly workout of external
debt – by involving the private sector and imposing a ‘‘standstill’’ – is needed to achieve
a fair sharing of the burden of losses created by a crisis. The reason is that such a
framework forces private creditors – who made imprudent lending decisions in a
crisis-affected country – to shoulder part of the crisis costs and, thus, mitigates the future
moral hazard problem.
By focusing on external sovereign debt, the international community explored two
options: a contractual approach and a statutory approach. A contractual approach
considers collective action clauses in sovereign bond contracts as a device for the
orderly resolution of crises; their explicit inclusion in bond documentation would provide a
degree of predictability to the restructuring process. A statutory approach, such as the
sovereign debt restructuring mechanism (Krueger, 2002), attempts to create the legal
basis – through universal treaty rather than through a set of national laws in a limited
number of jurisdictions – for establishing adequate incentives for debtors and creditors to
agree upon a prompt, orderly and predictable restructuring of unsustainable debt.
B Exchange rate policy coordination. Currently no consensus exists, even within ASEAN or
ASEAN þ 3, on a regional exchange rate arrangement. But, looking beyond the current

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global financial crisis and considering the rising degree of economic interdependence
within different economies through trade, investment, and finance, the region’s authorities
need to embark on exchange rate policy coordination with each other. Once global
financial stability begins to be restored and countries in the region register early
recoveries and move to monetary policy tightening, one can expect the resumption of
large capital inflows. To manage such capital inflows and maintain macroeconomic and
financial sector stability, it will be important for the authorities to allow greater exchange
rate flexibility vis-à-vis outside currencies – such as the US dollar and the euro.
B Principles to guide supervisors. The following are the principles to guide supervisors in
the transition to a higher level and quality of capital in the banking system:
B Building on the framework for countercyclical capital buffers, supervisors should require
banks to strengthen their capital base through a combination of capital conservation
measures, including actions to limit excessive dividend payments, share buybacks and
B Compensation should be aligned with prudent risk-taking and long-term, sustainable
performance, building on the Financial Stability Board (FSB) sound compensation
B Banks will be required to move expeditiously to raise the level and quality of capital to the
new standards, but in a manner that promotes stability of national banking systems and
the broader economy.
B Supervisors will ensure that the capital plans for the banks in their jurisdiction are
consistent with these principles.

The way global transaction banking is going, there is great need everybody to co-operate.
That is one of the key messages. All the global banks that are there today really need the
local banks to be strong and to help them out in crisis. The crisis has brought the transaction
banking industry much closer together. We have to move towards a planetary governance
structure – for the safety of the financial system. it is essential with the objective of
supporting global economic recovery and putting the economy back on track to sustainable
growth. It has become the ‘‘premier forum’’ for international economic and financial
cooperation, possibly. Reform of financial regulation needs clearly to be in order. Based on
recent experience, closing present and future regulatory gaps and de-conflicting
overlapping and ambiguous responsibilities would help reduce risk, especially as new
instruments and institutions evolve. The creation of a new systemic risk regulator, either at
the national or international level would be helpful if it could warn about the major existing
systemic risks, including the exploding debt, central banks’ balance sheet, and the bailout
mentality. But groups such as the FSB, working along with the IMF and G20, are better suited
to that role.
In response to the financial crisis of 2007-2009, authorities in many developed countries
have ensured the stability of the financial system by underpinning the liquidity and solvency
of major banks. This has typically entailed a combination of capital injections, exceptional
central bank liquidity provision, and government guarantees of medium term bank funding.
These measures have played a crucial role in restoring confidence.

1. ‘‘Proprietary trading’’, available at: http://en.wikipedia.org/wiki/Proprietary_trading

Further reading
Bank for International Settlements (2009), ‘‘Capital flows and emerging market economies’’, CGFS
Papers No 33, January.

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Moody’s Economy.com (2008), ‘‘A second quick boost from government could spark on small
business’’, July 24.

International Monetary Fund (2008), ‘‘World economic outlook: financial stress, downturns, and
recoveries’’, Chapter 5.

Ramey, V. (2008), ‘‘Identifying government spending shocks: it’s all in the timing’’, mimeo.

Rauchway, E. (2008), The Great Depression and the New Deal: A Very Short Introduction, Oxford
University Press, Oxford.

Soros, G. (2008), ‘‘The new paradigm for financial markets’’.

Spilimbergo, A., Symansky, S., Blanchard, O. and Cottarelli, C. (n.d.), ‘‘Fiscal policy of crisis’’, available
at: www.imf.org

Stijn Claessens, M., Kose, A. and Terrones, M.E. (2009), ‘‘A recovery without credit: possible, but . . .’’,
available at: www.voxeu.org

Subbarao, D. (2010), ‘‘Challenges for Central Banks in the context of the crisis’’, available at: www.Rbi.
org.in, February 12.

Taylor, J.B. (n.d.), ‘‘Lessons from the financial crisis for monetary policy in emerging markets’’, available
at: www.Rbi.org.in

Truman, E.M. (n.d.), ‘‘Policy responses to the global financial crisis’’, Peterson Institute for International
Economics, available at: www.iie.com/publications/papers

About the author

A. Gupta works with undergraduate and graduate students. He is the author of two books
on financial accounting and capital market. A. Gupta can be contacted at:

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