Two Effects of the European Financial Crisis

Abstract

Background: The European financial crisis has affected most of the EU member states, and European institutions have had to create new financial instruments to counter the impact. Most effects in the economic and political spheres can be attributed to high unemployment and changes in governments in peripheral countries (Greece, Ireland, Portugal, Spain and Romania). Objectives: The aim of this paper is to demonstrate the economic and political effects of the European financial crisis in some peripheral countries that have implemented austerity policies. Methods/Approach: The methodology used is mixed: an analysis of the primary economic variables of the selected countries in comparison to those of countries with low-risk premium was performed, and the relation between the bailouts and elections was presented. Results: The exacerbation of the crisis in the Eurozone is mainly due to the high political costs of austerity measures and not the high level of public spending and/or the alternations in the governments of peripheral countries. Conclusions: The European financial crisis is primarily a result of weak economic governance, and its effects are differentiated. The peripheral countries possess the highest rates of unemployment, and there is a higher tendency towards political instability in rescued countries.

Early warning system in business, finance, and economics

“…In all examined papers, the word system was used more than once. In more than 10 papers, following words are mostly used: early warning (43), crisis (32), finance (24), currency (17), predict (16), bank (13), and risk (10). Most of the analyzed words are used in titles of three papers: analysis, conditions, differ, dynamic, economy, emerging, environment, exchange, external, failure, insolvency, insurance, logit, management, monitoring, policy, price, project, rate, sovereign, stress, and value.…”

“…13 Moreover, companies are often applying early warning system so they can detect economic crisis and avoid negative events, not only in the areas related to finance but also to different managerial aspects, such as project management 14 and public relations and social media. 15 In the last decade, economic and business crisis had a strong negative impact on society and economy, 16 which incited the development and usage of early warning systems enable to recognize negative events for different environments, especially for financial sector. To the best of our knowledge, there is no structured analysis of the previous research on this topic.…”

Forecasting fiscal variables in selected European economies using least absolute deviation method

“…These countries together, except Croatia, were mainly analyzed through the effects of the crisis. [2][3][4] Different authors see the origins of the crisis in diverse factors. Some consider that the problem was mainly in banking sector 5 and others incorporate fragility of monetary union into their analysis.…”