ABSTRACT
INTRODUCTION
LITERATURE REVIEW
METHODOLOGY
ANALYSIS/FINDINGS
1. WHAT ARE THE IDENTIFICATORS OF CURRENCY CRISIS?
2. WHAT IS THE ESSENCE OF FINANCIAL CRISISIES OF 1997-1998?
3. CAN THE RUSSIAN FINANCIAL CRISIS OF 1998 BE SEEN FROM AN EX-CHANGE RATE POINT OF VIEW?
4. WHAT EFFECTS DID THE RUSSIAN FINANCIAL CRISIS OF 1998 HAVE ON THE EXCHANGE RATE, AND WHAT WERE THE CAUSES OF THE CRISIS`?
5. COULD THE RUSSIAN FINANCIAL CRISIS OF 1998 HAVE BEEN FORSEEN, AND HOW DID IT AFFECT THE EXCHANGE RATE DURING THE PERIOD OF THE CRISIS?
6. RECOMMENDATION. WHEN LOOKING AT THE RUSSIAN FINANCIAL CRISIS OF 1998 FROM AN EXCHANGE RATE POINT OF VIEW, WHAT LESSONS CAN BE LEARNED AND WHAT LED TO THE CRISIS?
CONCLUSION
BIBLIOGRAPHY
APPENDIXIES
ACKNOWLEDGEMENTS
First and foremost, I thank my tutors: …
My scientific curator explored and made available to all of us in great detail the problems of macroeconomics and microeconomics. He granted immeasurable latitude in how I met my scientific targets, and indulged my requests for the consultations and a time required to research the topics covered in this dissertation.
… was my "dream come true:" an experienced developer with an orientation towards researching on essence of bank crisis that will be enriching the theory of anticrisis policy for years to come.
I would also like to thank …
Finally, I offer the greatest praise and recognition to my …
LIST OF TABLES, GRAPHS AND ILLUSTRATIONS
Diagram 1 Development of NBS foreign exchange Reserves
Figure 1 The state of affairs at crisis historical periods
Figure 2-4 Exchange Rate 1995-2000. CPI Inflation. Russian Mer-chandise Trade Balance
Figure 5 Rate deviations of ruble (July-September, 1998)
Figure 6 Unemployment rate and inflation rate
Table 1 Interrelating indicators under a stress classification
Table 2 Probit Model Results
Table 3 Regression Summary
Table 4 Dynamics of Russian Federation Macroeconomic Indicators during 1993-97
Table 5 The Russian economy growth
PREFACE
The actuality and scientific significance of the given research is caused with the fact that the Asian crisis and the more recent Russian default of 1998 and the subsequent virtual closing of international capital markets to many developing countries have been advanced and widely discussed by policy makers, in academic literature and press reports. The crisis is still evolving and it is unwise to think that all the lessons that may need to be learned have already been identified.
CONTENTS:
ABSTRACT 6
INTRODUCTION 9
LITERATURE REVIEW 11
METHODOLOGY 19
ANALYSIS/FINDINGS
1. WHAT ARE THE IDENTIFICATORS OF CURRENCY CRISIS? 23
2. WHAT IS THE ESSENCE OF FINANCIAL CRISISIES OF 1997-1998? 27
3. CAN THE RUSSIAN FINANCIAL CRISIS OF 1998 BE SEEN FROM AN EX-CHANGE RATE POINT OF VIEW? 30
4. WHAT EFFECTS DID THE RUSSIAN FINANCIAL CRISIS OF 1998 HAVE ON THE EXCHANGE RATE, AND WHAT WERE THE CAUSES OF THE CRISIS`? 32
5. COULD THE RUSSIAN FINANCIAL CRISIS OF 1998 HAVE BEEN FORSEEN, AND HOW DID IT AFFECT THE EXCHANGE RATE DURING THE PERIOD OF THE CRISIS? 40
6. RECOMMENDATION. WHEN LOOKING AT THE RUSSIAN FINANCIAL CRISIS OF 1998 FROM AN EXCHANGE RATE POINT OF VIEW, WHAT LESSONS CAN BE LEARNED AND WHAT LED TO THE CRISIS? 51
CONCLUSION 60
BIBLIOGRAPHY 65
APPENDIXIES 79
ABSTRACT
The actuality and scientific significance of the given research was caused with the fact that the Asian crisis and the more recent Russian default of 1998 and the subsequent virtual closing of international capital markets to many developing countries have been advanced and widely discussed by policy makers, in academic literature and press reports. The crisis is still evolving and it is unwise to think that all the lessons that may need to be learned have already been identified.
Purpose of Research. The given paper was aimed at deriving lessons from the Russian financial crisis through examining the root causes of macroeconomic and financial sector indicators spanning the period 1997-1999.
Subject of Research - the financial crisis in Russia of 1998.
Objects of Research. The significant variables of Russian economy at 1998 state - foreign direct investment, inflation, world oil prices, real interest rates, current account, foreign exchange reserves, stock prices, real exchange rate, and export growth were examined in the work.
The theoretical base of research composed the works of the following authors: Kaminsky (1998), Krugman (1979), Obstfeld (1994), Masson (1998), Taimur and Goldfajn (2000), Satoshi Mizobata (2001) and others.
The Resource basis of the analytical part of research included:
- The Analytical Report & Macroeconomic Analysis.
- The World Economic Outlook Review (1998).
- Financial Stability Review Financial Crisis Management Articles 1998 (1999).
- The annual report of the Central Bank of Russia (1998).
Methodology of research. The approach estimates a probit or logit model of the occurrence of a crisis with lagged values of early warning indicators as explanatory variables. This approach requires the construction of a crisis dummy variable that serves as the endogenous variable in the probit or logit regression. Classification of each sample time point as being in crisis or not depends on whether or not a specific index of vulnerability exceeds an arbitrarily chosen threshold.
Hypothesis of research stating that political genesis in complex with macroeconomical factors of financial crisis in Russia of 1998 was proved.
In the third quarter of 1998, Russia experienced what seemed a classical financial crisis, combining a currency crisis, a debt crisis and a banking crisis. The Russian crisis was also evidently connected with the earlier Asian crisis, and sent shock waves across global financial markets.
Still, a closer look shows that the Russian crisis was mostly home made, typically caused by excessive public sector debt, and the mechanisms of crisis can not be understood without an understanding of the peculiarities of the Russian economic system, including demonetization and insider ownership.
Powerful business interests, fearing another round of reforms that might cause leading concerns to fail,
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