Browsing by Author "Abraham, H"

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    Bank runs: A risk mismanagement perspetive: A note
    (2008) Abraham, H
    This paper demonstrates that the fractional reserve system is a source of instability in commercial and investment banks. The purpose of investment banks is to enhance completeness of financial markets and thereby contribute to an efficient allocation of risk. When funds are raised through commercial banks to transact in securities of investment banks, this can cause instability to commercial and investment banks as is experienced currently in world financial markets.
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    Financial instability and bank's balance sheets: A note
    (2012) Abraham, H
    Following the recent financial crisis, it is sometimes argued that financial institutions should be regulated to a greater extent than before in order to prevent a recurrence of global financial crises. It is argued here that since banks create liquidity ex nihilo in exchange for financial collaterals whose nominal values are subject to market fluctuations, in general, banks’ regulation can have only a limited effect on the stability of the financial system. Monetary policy of central banks (i.e., setting short term interest rate) is essential to monitor asset prices and thereby create a stable financial environment.