Financial Crisis in the Euro-Zone and Moral Hazard

Hernán Ricardo Briceño Avalos

doi:doi:10.11648/j.jfa.20160404.12

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Financial Crisis in the Euro-Zone and Moral Hazard

Hernán Ricardo Briceño Avalos

Published in Journal of Finance and Accounting (Volume 4, Issue 4)

Received: 7 June 2016 Accepted: Published: 8 June 2016

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Abstract

The aim of this document is provide empirical evidences and theoretical knowledge about how the compelling current Sovereign Debt Crisis in the periphery Euro-zone countries was triggered in accordance with Moral Hazard theory, because the implicit and explicit externalization of risk cost for commercial financial institutions. Different from traditional working papers that concentrated only on weak macroeconomic fundamentals and contagion effects as the main origins of the previous financial crises. This research is dealing with the question how moral hazard problem in the Euro-zone periphery after the introduction of the Euro currency as a global competitor of the U.S.A. Dollar caused and/or nurtured their Fiscal and External unbalances. This after a short period of euphoria and wellbeing, with reduction of the interest rate and easily access of fresh capital to finance unprofitable and risky biased businesses without appropriate banking regulation; ending up in a vicious circle between weak banking system and fiscal imbalances. After assessing different economic and financial statistics from the Euro-zone, as the ratio Short Term External Debt/Foreign Exchange Reserve as a Moral Hazard index and Fiscal and External unbalances Accounts, making a comparison with North-core Euro countries. The first evidence is that the Sovereign Debt Crisis was originated in the awkward circle between weak financial system and implicit guarantees provided by negligent governments without financial regulation and supervision; while politicians differed necessary reforms as Fiscal Union.

Published in	Journal of Finance and Accounting (Volume 4, Issue 4)
DOI	10.11648/j.jfa.20160404.12
Page(s)	164-178
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Moral Hazard, European Monetary Union, Sovereign Financial Crisis, Financial Crisis

References

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Hernán Ricardo Briceño Avalos. (2016). Financial Crisis in the Euro-Zone and Moral Hazard. Journal of Finance and Accounting, 4(4), 164-178. https://doi.org/10.11648/j.jfa.20160404.12

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Hernán Ricardo Briceño Avalos. Financial Crisis in the Euro-Zone and Moral Hazard. J. Finance Account. 2016, 4(4), 164-178. doi: 10.11648/j.jfa.20160404.12

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AMA Style

Hernán Ricardo Briceño Avalos. Financial Crisis in the Euro-Zone and Moral Hazard. J Finance Account. 2016;4(4):164-178. doi: 10.11648/j.jfa.20160404.12

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@article{10.11648/j.jfa.20160404.12,
  author = {Hernán Ricardo Briceño Avalos},
  title = {Financial Crisis in the Euro-Zone and Moral Hazard},
  journal = {Journal of Finance and Accounting},
  volume = {4},
  number = {4},
  pages = {164-178},
  doi = {10.11648/j.jfa.20160404.12},
  url = {https://doi.org/10.11648/j.jfa.20160404.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20160404.12},
  abstract = {The aim of this document is provide empirical evidences and theoretical knowledge about how the compelling current Sovereign Debt Crisis in the periphery Euro-zone countries was triggered in accordance with Moral Hazard theory, because the implicit and explicit externalization of risk cost for commercial financial institutions. Different from traditional working papers that concentrated only on weak macroeconomic fundamentals and contagion effects as the main origins of the previous financial crises. This research is dealing with the question how moral hazard problem in the Euro-zone periphery after the introduction of the Euro currency as a global competitor of the U.S.A. Dollar caused and/or nurtured their Fiscal and External unbalances. This after a short period of euphoria and wellbeing, with reduction of the interest rate and easily access of fresh capital to finance unprofitable and risky biased businesses without appropriate banking regulation; ending up in a vicious circle between weak banking system and fiscal imbalances. After assessing different economic and financial statistics from the Euro-zone, as the ratio Short Term External Debt/Foreign Exchange Reserve as a Moral Hazard index and Fiscal and External unbalances Accounts, making a comparison with North-core Euro countries. The first evidence is that the Sovereign Debt Crisis was originated in the awkward circle between weak financial system and implicit guarantees provided by negligent governments without financial regulation and supervision; while politicians differed necessary reforms as Fiscal Union.},
 year = {2016}
}

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TY  - JOUR
T1  - Financial Crisis in the Euro-Zone and Moral Hazard
AU  - Hernán Ricardo Briceño Avalos
Y1  - 2016/06/08
PY  - 2016
N1  - https://doi.org/10.11648/j.jfa.20160404.12
DO  - 10.11648/j.jfa.20160404.12
T2  - Journal of Finance and Accounting
JF  - Journal of Finance and Accounting
JO  - Journal of Finance and Accounting
SP  - 164
EP  - 178
PB  - Science Publishing Group
SN  - 2330-7323
UR  - https://doi.org/10.11648/j.jfa.20160404.12
AB  - The aim of this document is provide empirical evidences and theoretical knowledge about how the compelling current Sovereign Debt Crisis in the periphery Euro-zone countries was triggered in accordance with Moral Hazard theory, because the implicit and explicit externalization of risk cost for commercial financial institutions. Different from traditional working papers that concentrated only on weak macroeconomic fundamentals and contagion effects as the main origins of the previous financial crises. This research is dealing with the question how moral hazard problem in the Euro-zone periphery after the introduction of the Euro currency as a global competitor of the U.S.A. Dollar caused and/or nurtured their Fiscal and External unbalances. This after a short period of euphoria and wellbeing, with reduction of the interest rate and easily access of fresh capital to finance unprofitable and risky biased businesses without appropriate banking regulation; ending up in a vicious circle between weak banking system and fiscal imbalances. After assessing different economic and financial statistics from the Euro-zone, as the ratio Short Term External Debt/Foreign Exchange Reserve as a Moral Hazard index and Fiscal and External unbalances Accounts, making a comparison with North-core Euro countries. The first evidence is that the Sovereign Debt Crisis was originated in the awkward circle between weak financial system and implicit guarantees provided by negligent governments without financial regulation and supervision; while politicians differed necessary reforms as Fiscal Union.
VL  - 4
IS  - 4
ER  -

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Hernán Ricardo Briceño Avalos

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APA Style

Hernán Ricardo Briceño Avalos. (2016). Financial Crisis in the Euro-Zone and Moral Hazard. Journal of Finance and Accounting, 4(4), 164-178. https://doi.org/10.11648/j.jfa.20160404.12

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Hernán Ricardo Briceño Avalos. Financial Crisis in the Euro-Zone and Moral Hazard. J. Finance Account. 2016, 4(4), 164-178. doi: 10.11648/j.jfa.20160404.12

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AMA Style

Hernán Ricardo Briceño Avalos. Financial Crisis in the Euro-Zone and Moral Hazard. J Finance Account. 2016;4(4):164-178. doi: 10.11648/j.jfa.20160404.12

Copy | Download

@article{10.11648/j.jfa.20160404.12,
  author = {Hernán Ricardo Briceño Avalos},
  title = {Financial Crisis in the Euro-Zone and Moral Hazard},
  journal = {Journal of Finance and Accounting},
  volume = {4},
  number = {4},
  pages = {164-178},
  doi = {10.11648/j.jfa.20160404.12},
  url = {https://doi.org/10.11648/j.jfa.20160404.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20160404.12},
  abstract = {The aim of this document is provide empirical evidences and theoretical knowledge about how the compelling current Sovereign Debt Crisis in the periphery Euro-zone countries was triggered in accordance with Moral Hazard theory, because the implicit and explicit externalization of risk cost for commercial financial institutions. Different from traditional working papers that concentrated only on weak macroeconomic fundamentals and contagion effects as the main origins of the previous financial crises. This research is dealing with the question how moral hazard problem in the Euro-zone periphery after the introduction of the Euro currency as a global competitor of the U.S.A. Dollar caused and/or nurtured their Fiscal and External unbalances. This after a short period of euphoria and wellbeing, with reduction of the interest rate and easily access of fresh capital to finance unprofitable and risky biased businesses without appropriate banking regulation; ending up in a vicious circle between weak banking system and fiscal imbalances. After assessing different economic and financial statistics from the Euro-zone, as the ratio Short Term External Debt/Foreign Exchange Reserve as a Moral Hazard index and Fiscal and External unbalances Accounts, making a comparison with North-core Euro countries. The first evidence is that the Sovereign Debt Crisis was originated in the awkward circle between weak financial system and implicit guarantees provided by negligent governments without financial regulation and supervision; while politicians differed necessary reforms as Fiscal Union.},
 year = {2016}
}

Copy | Download

TY  - JOUR
T1  - Financial Crisis in the Euro-Zone and Moral Hazard
AU  - Hernán Ricardo Briceño Avalos
Y1  - 2016/06/08
PY  - 2016
N1  - https://doi.org/10.11648/j.jfa.20160404.12
DO  - 10.11648/j.jfa.20160404.12
T2  - Journal of Finance and Accounting
JF  - Journal of Finance and Accounting
JO  - Journal of Finance and Accounting
SP  - 164
EP  - 178
PB  - Science Publishing Group
SN  - 2330-7323
UR  - https://doi.org/10.11648/j.jfa.20160404.12
AB  - The aim of this document is provide empirical evidences and theoretical knowledge about how the compelling current Sovereign Debt Crisis in the periphery Euro-zone countries was triggered in accordance with Moral Hazard theory, because the implicit and explicit externalization of risk cost for commercial financial institutions. Different from traditional working papers that concentrated only on weak macroeconomic fundamentals and contagion effects as the main origins of the previous financial crises. This research is dealing with the question how moral hazard problem in the Euro-zone periphery after the introduction of the Euro currency as a global competitor of the U.S.A. Dollar caused and/or nurtured their Fiscal and External unbalances. This after a short period of euphoria and wellbeing, with reduction of the interest rate and easily access of fresh capital to finance unprofitable and risky biased businesses without appropriate banking regulation; ending up in a vicious circle between weak banking system and fiscal imbalances. After assessing different economic and financial statistics from the Euro-zone, as the ratio Short Term External Debt/Foreign Exchange Reserve as a Moral Hazard index and Fiscal and External unbalances Accounts, making a comparison with North-core Euro countries. The first evidence is that the Sovereign Debt Crisis was originated in the awkward circle between weak financial system and implicit guarantees provided by negligent governments without financial regulation and supervision; while politicians differed necessary reforms as Fiscal Union.
VL  - 4
IS  - 4
ER  -

Copy | Download