ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

A+| A| A-

Financial Fragility in ‘Mature’ Markets

Financial Fragility in ‘Mature’ Markets

With rising non-financial corporate debt and evidence of elevated borrowing levels among non-bank financial companies, the fragility resulting from excess leverage has returned to haunt developed country financial markets. The fact that the collapse of a little-known family office firm like Archegos Capital Management inflicted huge losses on leading banks suggests that the failure of a rogue, overleveraged speculator can have systemic effects of the kind that unravelled in 2008.

At the end of March 2021, when the world was worn out having spent more than a year battling the ongoing pandemic, news broke out that Wall Street traders were searching for the source of a fire sale of tech, media and other stocks to the tune of around $19 billion. That burst of selling had resulted in the collapse of prices of the stocks of companies like ViacomCBS, Baidu and Tencent Music, wiping out some $33 billion in share values.

Dear reader,

To continue reading, become a subscriber.

Explore our attractive subscription offers.

Click here

Updated On : 15th May, 2021

Comments

(-) Hide

EPW looks forward to your comments. Please note that comments are moderated as per our comments policy. They may take some time to appear. A comment, if suitable, may be selected for publication in the Letters pages of EPW.

Back to Top