financial contagion


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Financial Contagion

A negative occurrence in one market, industry, or country that impacts other markets, industries, or countries. For example, problems in the U.S. financial markets starting in 2007 spread to other industries quickly and by 2008 had become a global financial crisis. Likewise, Japan's financial crisis in the 1990s had repercussions all over East Asia and elsewhere. See also: Globalization.

financial contagion

A financial problem that spreads among companies or regions. For example, Russia's 1998 default triggered sharp declines in the market values of debt issued by emerging countries.
References in periodicals archive ?
cole Normale Superieure, France, and is the author of two books on financial contagion, as well as a number of research articles on financial correlation.
Managing any outbreak of financial contagion will require nimble and judicious use of available policy buffers.
Federal Reserve, the Bank of Japan and the Bank of England, the ECB can now guarantee the eurozone against financial contagion.
Dr Nikos Paltalidis, of the University of Portsmouth Business School, who led the research published in the Journal of Banking and Finance, said: "The European banking system remains highly vulnerable and conducive to financial contagion, which implies that the policies designed to reduce systemic risk are not necessarily doing the job.
But there are concerns Europe is entering a dangerous period where the financial contagion could spread, pushing up borrowing costs across the eurozone with dire effects for hugely indebted countries such as Ireland.
In parallel, in the fourth line of research new policy evaluation tools are developed, with a focus on robust tools aimed at containing financial contagion and boom-bust cycles, maintaining fiscal sustainability and coordinating monetary, fiscal and regulatory policies in normal and crisis regimes.
Global Banking News-December 29, 2014--RBI talks of financial contagion
There appears to be some risk of financial contagion from a balance of payments crisis in Russia to other countries in Eastern Europe.
That exemption was created for Greece, because there was no "high probability" that Greek sovereign debt was sustainable, and the IMF's European members worried that a Greek restructuring would spread financial contagion to other eurozone countries.
dollar) inflows which should be negative for gold; however, should the issues become more severe, a financial contagion could begin to spread, with gold once again becoming a safe-haven play," said Peter Hug, Kitco's global trading director.
During the crisis, peripheral countries became net exporters of financial contagion to the core for the first time -- the relationship runs the other way around when markets assume solidarity between member states.
A difficulty with this view is that it is unclear why only derivatives and repo counterparties need to be protected from financial contagion.
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