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Speculative Bubbles And Financial Crises

Author

Listed:
  • FETINIUC, Valentina

    (International Institute of Management IMI-NOVA, Chisinau, Republic of Moldova)

  • IVAN, Luchian

    (International Institute of Management IMI-NOVA, Chisinau, Republic of Moldova)

  • GHERBOVEŢ, Sergiu

    (National Institute for Economic Research, Academy of Sciences of Moldova, Chişinău, Republic of Moldova)

Abstract

The speculative bubble can be defined as the trade in high volumes at prices that are considerably at variance with intrinsic values of certain assets. The burst of speculative bubble can cause financial crisis in specific form created by situation of investment process dysfunction, when investors looking for investment refuges and refuse usual investment opportunities. This phenomenon can be a substantial basis of liquidity crisis and general financial crisis. Therefore is very important for regulation authorities to take in to account the possibility of this type of crisis to elaborate specific measures to prevent and reduce the consequences.

Suggested Citation

  • FETINIUC, Valentina & IVAN, Luchian & GHERBOVEŢ, Sergiu, 2014. "Speculative Bubbles And Financial Crises," Journal of Financial and Monetary Economics, Centre of Financial and Monetary Research "Victor Slavescu", vol. 1(1), pages 153-162.
    • Handle: RePEc:vls:rojfme:v:1:y:2014:i:1:p:153-162
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    References listed on IDEAS

    as
    1. Froot, Kenneth A & Obstfeld, Maurice, 1991. "Intrinsic Bubbles: The Case of Stock Prices," American Economic Review, American Economic Association, vol. 81(5), pages 1189-1214, December.
    2. Behzad T. Diba & Herschel I. Grossman, 1985. "The Impossibility of Rational Bubbles," NBER Working Papers 1615, National Bureau of Economic Research, Inc.
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    More about this item

    Keywords

    bubble; crisis; asset; price; factors;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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