Diagnosing and Explaining the Global Financial Crisis: Central Banks, Epistemic Authority, and Sense Making

This article explores a key facet of the ideational dynamic underlying the politics of the global financial crisis, examining the interpretative and communicative practices through which the two most powerful central banks in the world—the Fed and the ECB—made sense of the events. Drawing on a constructivist neoinstitutional perspective, the study traces and analyzes the diagnoses and causal accounts of the global financial crisis formulated and voiced by these two actors, mapping and examining their evolution from the beginning of the events in the American subprime market in mid-2007 through the peak of the crisis in global financial markets in mid-2009. The analysis assesses the extent to which the two central banks diagnosed and explained the crisis in ways that challenged dominant notions and conceptual assumptions regarding the economic field, particularly the financial realm, or rather in ways that served to ratify them. While in the first stages of the crisis the diagnoses and causal accounts tended to ratify dominant notions and understandings of the financial field, they later evolved as involving a partial, but still significant, reassessment of established truths. These coherent and detailed sense-making plots touched upon some of the most basic attributes of global financial capitalism, carrying with them the potential for helping to open up the political space for a reevaluation of some of its ideational underpinnings.     

The Financial Crisis of the Local Authorities in Israel: A Resource-Based Analysis

The financial crisis affecting many of the local authorities in Israel has a significant influence on their ability to supply municipal services of an appropriate amount and quality. So far, studies have been addressed to the financial crisis from a political approach by discussing aspects such as the problematic interrelation between central and local governments together with resource allocation. In this paper we investigate the financial crisis of many local authorities in Israel from a strategic point of view. However, this is by no means to argue that other approaches such as institutional and political ones are not important. Rather, the paper investigates whether the financial crisis affecting many Israeli local authorities is a result of their own strategies and practices.
Specifically, we have used the resource-based approach to explore the nature of their joint crises and the potential strategic responses that the local authorities should adopt in order to move into a more favourable state. In particular, we examine three resource-based systems: customer-oriented, organizational culture, and human resources, as the strategic roots of this crisis. We also examine the way they could produce a sustainable competitive advantage and could lead local authorities from the present position to a better one. The article recommends that the heads of local authorities should move to a resource-based strategy in order to perform both more efficiently and effectively.     

关于全球金融经济危机的若干思考

由美国次贷危机引发的世界金融危机和经济危机表明了美国金融霸权的衰落。这是美国经济霸权的危机,也是美国大力推行的市场原教旨主义即新自由主义的危机。这场经济危机显示出当代资本主义的最新特点,即金融产业脱离实体经济片面畸形发展,全球经济过分金融化,因而被称作“全球金融市场资本主义”。目前经济危机还在持续,与此同时,世界政治也开始进入一个动荡不安的高风险的历史阶段。     

从国际金融经济体系变革看主要各方关系微妙变化

发端于美国的全球性金融危机和经济衰退继续蔓延和深化。危机暴露了长期以来一直由美欧主宰的现行国际金融经济体系的不合理,扩大广大发展中国家的代表权、发言权和决策权已势在必行。主要各方围绕金融、经济和政治权益,正在展开重大博弈。国际金融经济体系改革能否成功将取决于各方能否在平衡权益上达成妥协,找到一种新的协调合作方式,建立一种新的运行机制。     

Coping with financial crises: explaining variety in regional arrangements

Financial regional arrangements vary across countries and change over time. Until recently, most economists and political scientists took the European model of monetary integration as the yardstick to which all other regional financial arrangements had to measure up in this article. It is argued that the Euro crisis provides an opportunity for scholars to adopt a different perspective that does not interpret the variety of financial arrangements merely as economic deficiencies caused by the incapacity or unwillingness of regions to follow the European model. Instead, the comparative study of monetary and financial regionalism has to account for the different factors that shape variations. These go from different levels of economic development, over regional political and economic preferences to historical processes which shape the institutional context and the constellation of interests and social forces. Such an approach, which integrates economic and political science approaches, de-centres the Euro model and opens up a new understanding of the global diversity of regional monetary and financial cooperation, and their potential to cope with financial crises.     

Financial crises as catalysts for regional cooperation? Chances and obstacles for financial integration in ASEAN+3, MERCOSUR and the eurozone

This article compares and analyses the different answers from the Association of Southeast Asian Nations+3 (ASEAN+3), Mercado Común del Dur (MERCOSUR) and the eurozone on financial crises in their respective regions. All three regions were hit by economic turmoil between 1997 and 2012, but whereas ASEAN+3 and the eurozone answered with establishing regional liquidity arrangements (RLAs) in order to fight future crises, financial cooperation did not take off in MERCOSUR. Thus, the paper asks why some regions establish RLAs in cases of crisis and others do not. It argues that the variance of regional financial integration in different world regions is due to different interests of regional powers in their respective regions. The regional powers of ASEAN+3 and the eurozone are institutionally and/or economically highly embedded within their respective regions, but this is not the case for Brazil in MERCOSUR. China and Japan suffered from negative externalities of the Asian crisis, and, consequently, have had an interest to stabilize their neighbours’ economies after the crisis. In contrast, Brazil was able to follow a beggar-thy-neighbour strategy at the turn of the millennium, which externalized some of the costs of Brazil's own economic crisis towards Argentina. As a result, Brazil has had no interest in providing liquidity for its regional neighbours after the crisis. France and Germany are not only economically but also institutionally highly embedded in the eurozone because they share a common currency with their regional neighbours. Thus, the stability of the eurozone is a vital interest for Europe's regional powers, and they devote significant resources to stabilize the economies of the eurozone's periphery.     

Going South: capitalist crisis,systemic crisis,civilisational crisis

This article argues that the current protracted and severe financial and economic crisis is only one aspect of a larger multidimensional set of simultaneous and interacting crises on a global scale. The article constructs an overarching framework of analysis of this unique conjecture of global crises. The three principal crisis aspects are: an economic crisis of (over) accumulation of capital; a world systemic crisis (which includes a global centre-shift in the locus of production, growth and capital accumulation), and a hegemonic transition (which implies long term changes in global governance structures and institutions); and a worldwide civilisational crisis, situated in the sociohistorical structure itself, encompassing a comprehensive environmental crisis and the consequences of a lack of correspondence and coherence in the material and ideational structures of world order. In these ways, the global system is now `going south'. All three main aspects of the global crisis provoke and require commensurate radical social and political responses and self-protective measures, not only to restore systemic stability but to transform the world system.     

Is the USSR dead? Experience from the financial and economic crisis of 2008–2009

The paper examines the economic linkages between the post-Soviet states from the point of view of the financial and economic crisis of 2008–2009. It aims to find out whether the interdependence between the countries of the former Soviet Union is still large enough that crises in individual countries affect the economic development in the neighboring states, and assesses the impact of the crisis itself on the linkages between the former Soviet republics. The evidence is mixed: while some channels of interdependence deteriorated over the last decade, others became more important, and some were even strengthened by the crisis itself.     

Crises and unpredictability in developing countries

Developing countries have suffered most of the financial crises in the context of the process of economic and financial globalisation. Both current and previous crises have revealed that unpredictability is a feature common to all the episodes which occurred during the process of globalisation. Although certain alarms went off, any of those external financial crises were actually predicted by the advanced methods in use for prediction and country risk analysis. Taking into consideration the information above, the aim of this paper is to check the ability to foresee external financial crises in developing countries of both the country risk index published by Euromoney and the Credit Ratings variable included therein. We have focused on the external financial crises that took place between 1992 and 2011, that is, in a full globalisation era. The results are negative. It appears that neither the index nor the sovereign ratings are able to reflect early enough the vulnerabilities that arise previously to the setting off the crisis episodes. This leads us to conclude that the existing models of country risk have limits. Thus, it would necessary to develop new instruments to measure this risk, considering uncertainty as an essential feature of the current economic and financial environment.     

When revenues are not revenues: the influence of municipal governance on revenue recognition within Swedish municipal waste management

This paper explores the influence of municipal governance forms and structures on accounting compliance in municipal organisations. If municipal governance forms and structures influence accounting compliance, then understanding these relationships becomes important when discussing heterogeneous practice and efficient accounting regulation. The context and object of analysis is the practices of revenue recognition within the Swedish municipal solid waste management sector. Overall, this analysis identifies that financial accounting compliance is influenced by municipal governance forms and structures, and the results further highlight how financial accounting practices might diffuse through local intra-organisational processes. The results emphasise that municipal governance forms and structures are important factors when considering heterogeneous accounting practices in the municipal sector which complement the more conventional analysis of how external institutional, political and economic forces influence accounting choice and compliance.     

Economic orthodoxy and the East Asian crisis

It is increasingly apparent that the Asian economic crisis has also led to a serious ideological crisis in the West. Before the collapse there was broad agreement among Western orthodox economists that developing countries should pursue a set of economic policies, often referred to as the 'Washington consensus', which included financial sector liberalisation, privatisation of state-owned enterprises, fiscal discipline and trade, exchange rate and foreign investment deregulation. Since the collapse, however, this consensus has broken down. This paper examines the emergence of the new so-called post-Washington consensus, with its emphasis on governance and social capital. The lexicon of the new policy paradigm underlying this new consensus includes civil society, safety nets, and, especially, governance, to be added to the conventional Washington terminology of open markets, deregulation, liberalisation and structural adjustment. Our central thesis is that this new post-Washington consensus is an attempt to place more emphasis on the political and institutional foundations for programmes of structural reform. However, it is also a kind of politics of antipolitics that attempts to insulate economic institutions from the process of political bargaining.     

Risk Factors and Drivers of Financial Sustainability in Local Government: An Empirical Study

The current international crisis in public finances has made financial sustainability a key issue for governments. Although the European Union (EU) and other international organisations have recommended governments to monitor demographic and economic variables, few studies have considered the influence of these variables on financial sustainability. This paper seeks to identify and analyse the drivers and risk factors that influence the financial sustainability of local government. The findings identify both risk factors (unemployment and population aged under 16 years) and drivers (budgetary outcome) of financial sustainability, which may constitute a useful basis for decision-taking by managers and policy-makers.     

二十国集团与国际金融体系改革

此次全球金融危机的根源是人类的系统危机。美国的金融衍生品市场为投资者创造了比发行者更低的风险,个体风险的最小化使潜在风险在系统层面体现,最终导致系统瓦解。美国和世界经济缺乏增长点,导致走出危机后的全球经济向着长时间的、严重的萧条方向发展。二十国集团因创建目的差异和内在的矛盾关系,无法解决当前世界金融体系的问题,该组织演变为国际争论中心的可能性甚至大于全球治理的模式,它需要被使用但不应被寄予厚望。当前,世界经济面临着从投机型到生产型的痛苦转型,核销投机性债务、实行金本位制度并确立新的全球储备货币是痛苦相对较小的转型方式。     

Mayoral scalar strategies and the role of the central state after the financial crisis

Much has been written about state rescaling, politics of scale and the rise of cities and regions in Europe. Little is known, however, about the impact of the financial crisis on these processes. By taking the view of city mayors, this paper presents a comprehensive and timely re-evaluation of central tenets of this literature in the turbulent aftermath of the financial crisis. The analysis shows the variegated pathways of state rescaling before and after the financial crisis, the multifaceted scalar strategies with which mayors have responded in different countries and cities, and the impact of such strategies on their perception of a centralisation towards the national state. The paper concludes by emphasising the continued dominance of the central state, whereas potentials for the rise of cities are rather to be sought at subnational than at European or global scales.     

Accounting for human resource development in the public sector

This article evaluates the merits of utilizing human resource accounting (HRA) concepts to account for human resource development (HRD) in the public sector. It describes the development of the economic theory of human capital and the increasing recognition of human resources as human assets of public organizations to be managed and accounted for in a manner similar to capital assets. The development of HRA concepts concerning human resource value and cost is discussed. These HRA concepts are applied to HRD and to current and potential uses in external financial reporting and internal managerial accounting in public organizations. This article concludes that the application of HRA concepts to HRD would have significant benefit for the operational and strategic management of human resources in public organizations. Using HRA information in internal managerial decision making would demonstrate the value gained in excess of costs incurred for such activities. The application of HRA concepts in pubic organizations, whether to internal managerial accounting and decision making or to public sector financial reporting, would heighten the priority of HRD activities by recognizing them as asset building rather than as an expense.     

Adding rooms onto a house we love: Central banking after the global financial crisis

This article examines the extent to which central bankers have been willing and able to rethink their beliefs about monetary policy in the wake of the global financial crisis. We show that despite the upheaval, the core pre‐crisis monetary policy paradigm remains relatively intact: central bankers believe that they should primarily pursue price stability through targeting a low inflation rate in a transparent manner, and that they need operational independence in order to achieve this goal. In a bid to address post‐crisis conditions and maintain their credibility, however, central bankers have also layered new elements onto this paradigmatic core. We document both the resilience of pre‐crisis beliefs and the process of layering using computer‐assisted text analysis and qualitative analysis of 13,586 speeches given between 1997 and 2017 by central bankers from around the world.     

Miracle to meltdown: A pathology of the East Asian financial crisis

The financial crisis in East Asia was made more dramatic by the fact that the region's performance in terms of economic growth over the preceding decade had been widely perceived as a 'miracle'. What was it that transformed the region's fortunes, and what are the chances for a speedy economic recovery? Systematic analysis reveals that, while there is no unicausal explanation, and while few if any commentators anticipated the crisis before the event, the fundamental difference from previous international financial crises is the extreme indebtedness of the corporate sector of the crisis countries. Private sector repayment difficulties and the associated banking crises triggered the sudden withdrawal of capital and the collapse of exchange rates. Failure to address the underlying private sector debt overhang, and reliance instead on conventional macroeconomic policy solutions, have led to a decline in output and a depreciation in exchange rates which have been far greater than need have been the case.     

Did Public Transfers Crowd Out Private Transfers in Korea During the Financial Crisis?

How effective are public transfers in protecting households facing financial crisis-induced negative shocks? Existing studies have not yet carefully considered the inter-relationship between public transfers and the existing private transfer network. In the context of the financial crisis in Korea, this paper investigates the possible crowding-out effect of public transfers on private transfers by explicitly considering the endogenous responses of private transfers against public transfers. By using two Korean household-level panel data sets for the periods of 1995–1998 and 1998–2003, we found a post-crisis, but not pre-crisis crowding-out effect of public transfers; more importantly, a crowding-in effect is observed during the crisis. The results suggest that private transfer networks were strengthened under the initial phase of the financial crisis, which possibly complemented public transfers due to the lack of effective formal safety nets, while public transfers became effective after the crisis, thereby replacing private transfers. Our results suggest that particularly at the initial stage of the crisis, the government could have played an important role in assisting households to weather the negative impacts of the crisis.     

Mandatory or Not Mandatory Reporting? Insights From Italian Bank Foundations

In the Italian nonprofit field, bank foundations face an increasing demand to account for their grant activity in forms that go beyond traditional financial statements. Consequently, bank foundations have developed specific reports in accordance with a 2001 Italian law that requires a mission report to be included within financial statements. This study investigates the peculiarities of social reporting documents in terms of standards used and formal characteristics, revealing different adoption levels. Contributing to an ongoing debate, the analysis of the reporting practices underlines how the due by law on social accounting could hamper the disclosure in nonprofit organizations.