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Financial Crisis

C/F/137. Dissertation. The Causes of the 1998 Russian Financial Crisis

WORDS:

9900

DATE:

2006

PRICE:

99.99 GBP

This dissertation examines the major causes which gave rise to the Russian financial crisis of 1998. Before the main dissection the author provides a comprehensive literature review of the existing articles dedicated to the collapse of Russian financial markets in August 1998. It is found that the crisis was mainly due to short-sighted economic policies of the Russian government which run budget deficits and heavily borrowed and the Central Bank of Russia which maintained overvalued exchange rate. The framework of currency crisis models is used to analyze the causes and development of the crisis. Since this financial cataclysm was of complex nature all three generations of currency crisis models provide some explanations for the crisis. However, the third generation is found especially beneficial including the theories of herding behavior, contagion and spill-over effects.

KEYWORDS: Financial Crisis, Currency Crisis, August 1998, Russia, Herding Behavior, Spill-over E,