The Danger of Relocation of Money: Some Examples from History
2014 (English)In: Preindustrial Commercial History: Flows and Contacts between Cities in Scandinavia and North Western Europe / [ed] Markus A. Denzel and Christina Dalhede, Stuttgart: Franz Steiner Verlag, 2014, 43-60 p.Chapter in book (Refereed)
Much has been written about the role of domestic debt expansion preceding and causing financial crises but less about the characteristics of cross-border debt expansion. In this article, three cases of massive relocation of capital – cross-border or cross-region - have been examined: Malmö diskont in the early 19th century, Credit-Anstalt in the 1930s and Latin America in the 1970s and 1980s. Based on this examination, certain characteristics of such relocation have preliminarily been identified: an institutional change preceded the glut (defined on page 2) of money in the originating market, cross-border capital is easily available but volatile, the relocation of capital is followed by mismanagement and risky investments, small countries or markets are vulnerable to cross-border money and lastly; complacency by authorities, excessive confidence, lack of transparency tend to increase the size of relocation. Each of these findings merits a closer examination to be incorporated in and contribute to the general theories concerning the causes of financial crises.
Place, publisher, year, edition, pages
Stuttgart: Franz Steiner Verlag, 2014. 43-60 p.
Financial crises - banking
IdentifiersURN: urn:nbn:se:kth:diva-150403ISBN: 978-91-978210-5-6ISBN: 978-3-515-10824-9OAI: oai:DiVA.org:kth-150403DiVA: diva2:742988
QC 201409222014-09-032014-09-032014-09-22Bibliographically approved