The Impact of the Subprime Crisis on the Industrial Sector of the Emerging Countries

Mouna REKIK^1,

¹Finance Methods and Accounting, Faculty of Economics and Management of Sfax, University of Sfax

Cite this paper:
Mouna REKIK. The Impact of the Subprime Crisis on the Industrial Sector of the Emerging Countries. Journal of Behavioural Economics, Finance, Entrepreneurship, Accounting and Transport. 2016; 4(2):24-34. doi: 10.12691/jbe-4-2-2

Abstract

This paper describes an analysis of number of emerging countries so as to identify the impact of the subprime crisis on their industrial sector. Using the analysis of multivariate time series, we will try to examine the real impact of the crisis on the industrial sector in five emerging countries through five channels: the interest rate channel, the wealth impact channel, the bank lending channel, the shock and uncertainty channel and the trade channel, over the period 2002-2011. According to the estimates of the SVAR model, our key results indicate that emerging countries are expected to take political and economic measures to alleviate the negative effects of the subprime crisis on their industrial sector. In fact, we can say that our results empirically demonstrate that the financial channel is the most important for the emerging countries.

Keywords:
sub-prime crisis emerging countries SVAR transmission channels

This work is licensed under a Creative Commons Attribution 4.0 International License. To view a copy of this license, visit http://creativecommons.org/licenses/by/4.0/

References:

[1]	Al Qaisi, K., (2013), “The effect of the financial crisis on the Jordanian industrial sector”. International Journal of Finance and Banking Studies, vol. 2, no. 1, pp 43-47.
[2]	Blot CH., LeBayon S., Lemoin M. et Levasseur S. (2009), « De la crise financière à la crise économique : une analyse comparative France- Etats Unis », revue de l’OFCE n°110.
[3]	Burk men, S.P., Gelos, G., Renhack, R., and Walsh, J.P., (2012), “The global financial crisis: explaining cross-country differences in the output impact”, Journal of International Money and Finance, Vol 31, pp 42-59.
[4]	Bui, T., and Bayoumi, T., (2010), “Their cup spilleth over”, Finance and Development, pp 32-34.
[5]	Chiang, T. C., Jeon, B. N., and Li, H. (2007), “Dynamic correlation analysis of financial contagion: Evidence from Asian markets”, Journal of International Money and Finance, Vol 26(7), pp 1206-1228.
[6]	De, P., and Chiranjib N., (2011), “Global financial crisis: Implications for trade and industrial restructuring in India”, ADBI Working Paper Series.
[7]	Didier, T., Hevia, C., and Schmukler, S., (2012), “How resilient and countercyclical were emerging economies during the global financial crisis”, Journal of International Money and Finance (forthcoming), pp1-26.
[8]	Dooley, M., and Hutchinson, M., (2009), “Transmission of the U.S. subprime crisis to emerging markets: Evidence on the decoupling–recoupling hypothesis”, Journal of International Money and Finance, n° 28, pp 1331-1349.
[9]	Engle, R.F. and Granger C.W.J. (1987), “Co integration and Error correction: representation, estimation, and testing”, Econometrica, Vol 55, N°2, pp 251-276.
[10]	Fujiwara, I., and Takahashi, K. (2012), “Asian financial linkage: Macro-finance dissonance”, Pacific Economic Review, Vol 17(1), pp 139-159.
[11]	Gimet, C. (2011), “The vulnerability of ASEAN countries to international financial crises”, Review of International Economics, Vol 19(5), pp 894-908.
[12]	Johansen, S. (1988) “Statistical Analysis of Cointegration Vectors”, Journal of Economic Dynamics and Control, Vol 12, pp 231-4.
[13]	Kaminsky, G.L., Reinhart C. and Vegh C., (2003), “The Unholy Trinity of Financial Contagion”, NBER Working Paper, no. 10061.
[14]	Sims, C.A. (1980), “Macroeconomics and reality”, Econometrica, Vol 48, pp 1-48.
[15]	Yiu, M. S., Ho, W. A., and Choi, D. F. (2010), “Dynamic correlation analysis of financial contagion in Asian markets in global financial turmoil”, Applied Financial Economics, Vol 20(4), pp 345-354.