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Hence, it is a much deeper problem considering the consequences of imperfections in international capital markets. [9] It may highly reduce the country's ability to extract financial resources on international basis. the most fundamental reason is the sovereign risk that causes from the lack of a supranational legal authority, capable of ...
A capital market is a financial market in which long-term debt (over a year) or equity-backed securities are bought and sold, [1] in contrast to a money market where short-term debt is bought and sold. Capital markets channel the wealth of savers to those who can put it to long-term productive use, such as companies or governments making long ...
The second group of explanations focuses on international capital market imperfections, mainly sovereign risk (risk of nationalization) and asymmetric information. Although the expected return on investment might be high in many developing countries, it does not flow there because of the high level of uncertainty associated with those expected ...
The idea that Capital Markets integration is an important project to tackle the problem of market fragmentation in Europe has its contradictions. Unlike the Banking union of the European Union, the Capital Markets Union project encompasses different member states with different legal backgrounds and does not entail full harmonisation. [95]
Under the EFSM, the EU successfully placed in the capital markets an €5 billion issue of bonds as part of the financial support package agreed for Ireland, at a borrowing cost for the EFSM of 2.59%. [291] Like the EFSF, the EFSM was replaced by the permanent rescue funding programme ESM, which was launched in September 2012. [292]
In financial economics, a liquidity crisis is an acute shortage of liquidity. [1] Liquidity may refer to market liquidity (the ease with which an asset can be converted into a liquid medium, e.g. cash), funding liquidity (the ease with which borrowers can obtain external funding), or accounting liquidity (the health of an institution's balance sheet measured in terms of its cash-like assets).
Merton's portfolio problem is a problem in continuous-time finance and in particular intertemporal portfolio choice. An investor must choose how much to consume and must allocate their wealth between stocks and a risk-free asset so as to maximize expected utility .
Using data starting from the top of the market in 1929 or starting from the bottom of the market in 1932 (leading to estimates of equity premium of 1% lower per year), or ending at the top in 2000 (vs. bottom in 2002) or top in 2007 (vs. bottom in 2009 or beyond) completely change the overall conclusion.