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Capital flight is a burden on the balance of payments

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Capital flight is a burden on the balance of payments

14/5/2017 12:00 am
Baghdad/Emad Emirate

Financial crises are disorders lead to significant negative consequences on the economy, as reflected on the value of the currency to cause an imbalance in the local payment system and banking crisis occurs due to misallocation of resources and double tapped and a certain degree of corruption, leading to the deterioration of the currency exchange rate may increase inflation.

Economic academic Dr Tayyab Gabri in the interview for "morning" that pressures on the currency during the financial crisis are a burden on the overall banking system,

adding that the banking system's ability to bear mainly depends on the degree of support for local banking commitments of foreign reserves, the Government may have to make a formal reduction in value of the currency, causing a decline In stock prices add The matslth interest rate changes What leads to the decline of foreign investors.

Gabri said interest rate starts to rise until it reaches its peak before the crisis, interest rate increases could be a reflection of a tight monetary policy by the monetary authorities to curb credit policies as well as to stop converting local currency into foreign currency,

noting that higher interest rate pushes investors to abandon their securities and deposit value in commercial banks to benefit from the attractive interest rate will lead to an imbalance in the financial market in which often precedes depression

The banking crisis and recession in the financial market may prompt investors to shift their money toward other assets, and in many cases the stock market crash Trav's corrections in asset markets.

Jabri stressed that capital flight abroad constitute a significant burden On the balance of payments, especially If the owner so weak Economic growth and decline Exports,

adding that its impact on the trade balance will reflect the negative effects on the balance of payments.

He hinted that with the advent of the banking crisis reduced the growth of deposits and credit
The decline in deposits more evident in countries where the contribution of a few foreign banks with a Government-owned banks.

Economic academic Dr Falah Hassan thuwaini of Zanzibar in turn reported to "morning" that economic openness, in conditions of globalization and that accompany her from freeing financial precaution after long buried, weak administrative and banking experience dealing with new variables and lack of evaluation

Credit management, weak oversight and banking supervision, leads to short term foreign loans in the areas of real estate or consumer (as in the Southeast Asian crisis of 1997).

And between ëæíäí banking crisis to occur as a result of macroeconomic disturbances, explaining that the trauma caused by deteriorating terms of trade and as well as fluctuations in rates of inflation and economic recession affecting the sovereignty of the overall economic situation and especially banking.

His economic instability leads to footing the uncertainty which hazes seeing borrowers in discrimination in terms of the degree of safety of banks, when it will expect applicants to all banks in a serious condition, what generates the banking panic.


Thank you Ikea !!

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