Something strange has been happening in the US stock market in recent weeks. The share prices of struggling companies have rocketed. The explanation for this phenomenon is a ‘short squeeze’, which is something of an historical relic. Over the past few weeks, shares in struggling US companies whose business has been hurt by the pandemic […]
Category: Banks & financial markets
Recent economic turbulence has raised questions about the long-term sustainability of the UK’s fiscal and current account balances – the ‘twin deficits’. The country’s experience over several decades offers insights into the origins of recent troubles and some potential hazards ahead. In an era of high inflation and rising interest rates, the UK has large […]
With the UK experiencing self-inflicted financial market turmoil, and growing concerns about economic fragility across the world, the work of the new laureates feels particularly timely. Their research has greatly improved our understanding of the role of banks – in normal times and in crises. The Nobel Prize in economics – or to use its […]
The prices of shares in US technology companies have skyrocketed in recent months. A number of indicators suggest that these firms are overvalued, perhaps the strongest sign of a ‘tech bubble’ being the extent to which insiders are selling their shares. Shares in new technology companies in the United States have enjoyed a remarkable 16 […]
The economy is suffering as a consequence of Covid-19 and measures taken to contain it, yet share prices have been rising sharply. This raises the possibility that the stock market is now in a bubble, with valuations increasingly detached from business and economic fundamentals. At the beginning of 2020, stock markets around the world began […]
While the banking sector will be negatively affected by the pandemic, it is also critical for economic recovery. But the crisis will strengthen competitive pressures on banks by accelerating trends towards digitalisation and new financial service providers. The lockdown to prevent the spread of the Covid-19 has stopped economic activity across many sectors, with important […]
There were big falls in share prices well before we grasped the likely severity of the pandemic and the economic impact of coronavirus. So what are the interactions between asset prices and economic activity – and what might price changes imply for future output growth? Macroeconomic data tend to lag events, which means there is […]
As member-owned and typically community-based financial intermediaries, credit unions and other cooperative financial institutions can be more responsive to local economic needs, especially during a crisis. But there are emerging threats to their business model. What is the role of financial cooperatives like credit unions in mobilising savings and extending credit during periods of crisis? […]
Stress tests of major banks in 2019 suggested that the sector was sufficiently capitalised and had enough liquidity to withstand big economic shocks and continue to meet the financing needs of households and firms. But is it safer than 10 years earlier? And is it safe enough to cope with economic damage from coronavirus? Prior […]