`What lessons does the Russian financial crisis in 1998 hold for other economies in transition?`

Running Head : What lessons does the Russian financial crisis in 1998 hold for other economies in transition

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Date 1 . Introduction

1 .1 Financial crisis

Financial crisis can be referred to as interruption to monetary markets in which ethical risk and unfavorable choice become bad hence economic markets are unable to competently organize funds to those who have favorable industrious investment opportunities (Morten , 2004 ) The financial crisis usually impairs a remarkable segment of banking systems resources . This causes the relevant institutions to fail to

supply the necessary liquidity because of a less cash encountered

1 .2 Transitional economy

This is an economy that is changing to a free market economy from those ones that are centrally planned . Such an economy lowers trade barriers and also lets the market forces set the prices of the products . Under transition economies , macroeconomics is employed to deal with the organization , presentation and activities of a national economy which helps in calculating instantaneous high inflation . It also causes privatization and reformation which creates a monetary sector hence moving from communal to confidential possession of resources

1 .3 Objectives

This research aims to bring out the lessons that can be derived from the Russian financial crisis of 1998 . These lessons will be arrived at by scrutinising the root causes of the financial crisis . The parameters that are imperative to arriving at the conclusion are world oil prices , the GDP per capita of Russia , its foreign direct investment /GDP , the stock prices , Russia...