FINANCIAL STABILITY, THE OBJECTIVE OF DEVELOPMENT FINANCIAL MARKETS
Autor (i): Elena, Radu (Grigorie)
JEL: G00, G01, G10, G15, G19
Cuvinte cheie: financial stability, volatility, crisis, stock market indices
Abstract:
In this paper is analyzed the degree of financial stability based on the evolution of the main stock market indices in Asia and the USA. I also considered it is appropriate to determine the volatility of these indices for a more eloquent analysis of the stability of these markets. The modern financial system is characterized by an extremely complex structure and dynamics and, for this reason, any shock, imbalance manifests itself sharply, reaching the loss of stability. These aspects were argued by the consequences of the economic and financial crisis that destabilized the financial system that is still trying to recover. The financial crisis has made us aware of the need to improve the analysis and management of the factors underlying the financial contagion and risk concentration, of interconnectivity. Maintaining financial stability is a major concern for central banks and global financial sector supervisors. Financial stability is also a constant challenge, largely due to the rapid pace of innovation and the ongoing structural evolution of financial systems. Relatively recent changes have included the development of a whole range of financial instruments and the increase in the number of new cross-sectoral market participants. These developments have generated an increasing number of possible channels through which economic and financial shocks can be generated and transmitted. The stability of the financial system makes it necessary for its main components, namely the markets, the corresponding infrastructure and the financial institutions, to be able to absorb the disturbances together. Stability also requires that the financial system facilitate a flexible and efficient reallocation of the financial resources of those who save to investors, that financial risk be accurately analyzed and valued, and that it be managed efficiently.
In this paper is analyzed the degree of financial stability based on the evolution of the main stock market indices in Asia and the USA. I also considered it is appropriate to determine the volatility of these indices for a more eloquent analysis of the stability of these markets. The modern financial system is characterized by an extremely complex structure and dynamics and, for this reason, any shock, imbalance manifests itself sharply, reaching the loss of stability. These aspects were argued by the consequences of the economic and financial crisis that destabilized the financial system that is still trying to recover. The financial crisis has made us aware of the need to improve the analysis and management of the factors underlying the financial contagion and risk concentration, of interconnectivity. Maintaining financial stability is a major concern for central banks and global financial sector supervisors. Financial stability is also a constant challenge, largely due to the rapid pace of innovation and the ongoing structural evolution of financial systems. Relatively recent changes have included the development of a whole range of financial instruments and the increase in the number of new cross-sectoral market participants. These developments have generated an increasing number of possible channels through which economic and financial shocks can be generated and transmitted. The stability of the financial system makes it necessary for its main components, namely the markets, the corresponding infrastructure and the financial institutions, to be able to absorb the disturbances together. Stability also requires that the financial system facilitate a flexible and efficient reallocation of the financial resources of those who save to investors, that financial risk be accurately analyzed and valued, and that it be managed efficiently.
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