Fellow and professor examine role of IMF in financial crises in developing countries

first_imgIn a lecture in the Hesburgh Center auditorium Tuesday hosted by the Kellogg Institute, visiting Kellogg fellow Bumba Mukherjee and Notre Dame assistant professor Alexandra Guisinger spoke about their joint research on financial crises in developing countries and the conditions associated with the success of International Monetary Fund (IMF) programs in those countries.Mukherjee said based on the duo’s research, they believe the success of programs suggested by the IMF, which lends money to countries facing economic and financial crisis, is largely dependent upon the financial and political power of non-bank financial institutions — more commonly referred to as “shadow banks.”“As financial globalization has taken off in the last 20, 30 years in the developing world in particular, [shadow banks] are becoming important business actors,” he said.Guisinger said countries turn to the IMF to avoid the possibility of deep economic recession in times of financial and economic distress — specifically when there is danger of a “sudden reversal” or the abrupt decline in the inflow of capital. However, Guisinger said the IMF can complicate the economic situation, bringing in “a new set of actors, a new set of incentives and can interact with this more general pattern of the ebbs and flows of capital.”The standard recommendation of the IMF for a country to avoid a sudden reversal, Mukherjee said, is to impose regulations on shadow banking. He said a problem arises when the shadow banks of a given country are powerful enough to effectively oppose the IMF regulations.“When you have these extremely concentrated, very strong, large, financially powerful shadow banks, that’s precisely when IMF programs won’t work,” Mukherjee said. “If anything, they’ll make things even worse.”Guisinger said the result is the departure of foreign investors and a stock market crash, which can have “cascading effects on the economy and on political conditions.”“Stock market crashes are not trivial,” Mukherjee said. “They have terrible consequences. Investments collapse, the economy collapses, unemployment rates go up, there’s political riots — people respond.”Mukherjee said citizens associate the IMF, and thus the government responsible for asking the IMF to help, with the financial crisis. He said this puts enormous political pressure on government officials, who resort to fraud out of fear for their political careers.“It’s this deadly combination in terms of IMF programs and financial crises that leads to these bad political outcomes,” he said.Mukherjee said his research with Guisinger led him to conclude that the IMF should reform its approach and consider countries on a case by case basis.“The problem here is that the IMF is not really talking to governments who come to them desperately looking for help,” Mukherjee said. “They are coming up with this blueprint without really looking at local conditions, which is not working.”Tags: financial crisis, IMF, International Monetary Fund, Kellogg Institute, NBFI, non-bank financial institutions, Recession, shadow bankslast_img read more

Badgers defense own the night once again in 20-7 win over Gophers

first_imgMINNEAPOLIS — In a frigid border battle between two Big Ten foes, it was the[media-credit name=”Andy Fate” align=”alignright” width=”336″][/media-credit]Wisconsin football team’s commanding defensive play that heated up the field in TCF Bank Stadium to bring the highly coveted Paul Bunyan’s Axe back to UW.It was performance that by all standards seems remarkable, holding a Minnesota (8-3, 4-3 Big Ten) team that entered the battle riding four-straight conference victories scoreless against the Badgers’ (9-2, 6-1 Big Ten) defensive squad.“It’s a tough-minded group, the defense played extremely well, they did a nice job of getting out of the drives, being physical and taking care of business,” head coach Gary Andersen said. “I was proud of them.”Yet, for Wisconsin, it has become somewhat of a routine as the defense has now allowed a touchdown in three-straight Big Ten meetings — against Iowa, Indiana and now Minnesota. The last time the defense gave up a seven-point score in conference play was back on Oct. 19 against the Fighting Illini.The Golden Gophers’ only score of the game came early in the second quarter as redshirt junior linebacker Aaron Hill completed a textbook pick-six, sniping a pass from redshirt sophomore quarterback Joel Stave and running 39 yards into the end zone to put the Minnesota up 7-3.The first time UW has fallen behind on the scoreboard since its 6-0 deficit to open play against Iowa, the Badgers’ defense made sure Minnesota would not see itself dancing into the maroon and gold end zone again.It wouldn’t be until its final possession of the game that UM entered Wisconsin’s red zone, and it was senior linebacker Chris Borland who halted the late Gopher attack with a tackle on fourth down at the Wisconsin 13-yard line to seal in UW’s 10th-straight victory over Minnesota.“I think early on they were moving the ball. I have a lot of respect for Minnesota’s offense. They are very physical and maybe that caught us a little bit by surprise. It is hard to emulate that in the week,” Borland said. “We responded well and adjusted to that and to not let up any points to a team that has at least been moving the ball against some good defenses. It’s a performance to be proud of.”A continuing sign that Borland is one of the nation’s top linebackers, No. 44 silenced an exuberant crowd all afternoon, recording a team-high 12 tackles. Though his performance all game assisted UW in its domination over the Gophers, it was Borland’s pair of fumble recoveries that may have been the difference maker.In their first offensive drive following the pick-six touchdown score, the Gophers looked to extend the four-point lead. Redshirt senior offensive linebacker Brendan Kelly would have no part in that, sacking sophomore quarterback Philip Nelson for a loss of six yards and stripping the ball loose for Borland who returned the ball nine yards to midfield.Looking for an extra opportunity, or simply another yard, Borland even attempted to push the ball off into the hand of sophomore linebacker Joe Schobert, who was steps ahead but was moments too late as Gopher junior center Tommy Olson came in for the tackle.After Wisconsin added its final seven points to the board, the senior standout again came up big in the third quarter on the opening Gopher offensive play. Going in for a tackle of running back David Cobb for a loss of three, Borland managed to end the play with the ball himself.“He is a leader of the defense. There are a lot of leaders on the defense,” Andersen said. “He is one of the highlighted guys and deserves to be. There are a lot of […] seniors that are on that defense that played a lot of snaps.”It was a standout night for Kelly as well, as the Minnesota native recorded four tackles and a team-high two sacks including the forced turnover on Nelson in the second quarter.“The biggest thing is when those were happening. Minnesota had some momentum driving there, so a couple turnovers is huge,” Kelly said.The forced turnover by Kelly made for a Wisconsin offensive drive that took just five plays for 49 yards to give UW a 10-7 lead, and one they would not let down for the remainder of play.While the UW linebacker contingent once again owned the day for Wisconsin, its secondary play that has received mixed scrutiny all season long came together for an equally impressive performance. Completing just seven of his 23 pass attempts, Nelson and his Gopher offense were held to just 83 passing yards on the day after an average of 198 passing yards in its past four conference games.Dropped passes and missed opportunities appeared to be the theme of the night for the Gopher offense, but it was a combined effort of the young Badger secondary, led by sophomore safety Michael Caputo with four tackles. Redshirt freshman Nate Hammon and redshirt sophomore cornerback Darius Hillary also each recorded three tackles on the night, with Hammon forcing the first Gopher turnover of the game to start the second quarter.“We had some good pieces to the puzzle and had to replace some people in the back end. If you look at that crew it is pretty amazing,” Andersen said, looking at the progress of his defense this season. “There are a lot of kids playing in that back end and that was the challenge, to put it together and it’s a credit to the kids.”last_img read more