THE ESSENCE OF GLOBAL FINANCIAL CRISES AND OPPORTUNITIES TO PREVENT THEM

Abstract

The historical development of the world economy has been affected by such phenomena as the global financial crisis. They have evolved and transformed along with the development of the world economy, integration and globalization. The constant dynamic development of international economic relations leads to an increase in the speed of spread and increase the difficulty of overcoming the effects of financial crises. They cross the borders of national economies and become global, occur more often and have more and more devastating consequences. Further financial globalization contributes to the spread of periods of global financial instability, which necessitates their constant monitoring, systematic study and analysis. Timely detection of pre-crisis factors and the formation of effective preventive tools will reduce the negative effects of global financial crises. The identification of global financial crises also takes into account perturbing factors and their consequences. Among the disturbing factors are the main: monetary, political, economic and technological. The perturbing factors of the global financial crises are related to various areas of international relations and must reach a certain level. Monetary and financial factors of the disturbance include instability of the banking system, growing share of doubtful loans, hyperinflation, overvaluation, rising government deficit and debt, large balance of payments deficit, dollarization of the economy, increasing the number of derivatives in stock markets. The main consequences of this group of factors are: declining exports, falling real estate and stock prices, a sharp drop in lending, falling GDP, speculative boom. Examples of political factors are globalization and political processes, corruption processes, political errors in government policy, changes in regulations, and so on. Economic factors include: rapid growth in demand for real estate and irrational business expectations, which causes cross-sectoral capital inflows and the expansion of high-risk banking operations. Technological factors are innovative technologies, products and innovative management methods. As a result of this group of factors, profitability in certain industries increases, which, in turn, leads to intersectoral capital inflows, then there is a speculative boom and new risks. The boom is being replaced by panic and the turmoil of the global financial market. With a speculative boom, speculative financing spreads (liabilities are greater than the inflow of funds), households and businesses increase loans and cannot repay them. Products and assets of firms begin to sell out quickly, there is a market recovery. Due to the large supply of assets, their prices are falling.