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Financial Crisis In Kazakhstan Essay

2998 words - 12 pages

Table of contents

I. Introduction 2
II. The Main Causes of Financial Crisis in Kazakhstan 3
III. The Consequences of Financial Crisis in Kazakhstan 8
IV. State anti-crisis program 10
V. Conclusion 12
VI. Reference list 14

Introduction

All residents of Kazakhstan met with the word "crisis". It is called the banking crisis, financial crisis, economic crisis in 2008, the global crisis, as well as the crisis in Kazakhstan. Today, the words "financial crisis" is on the lips of not only business owners and top managers but also among ordinary workers, even among children. What is financial crisis?
The Financial Crisis -Situation where the value of a ...view middle of the document...

According to Tulepov , the root of the crisis in Kazakhstan is a violation of one of the main principles of monetary economics - the free market work: in particular, the State pressure in the market pricing of credit resources in order to lower interest rates of placement. As we can see, this is the beginning of deterioration in the financial condition of the banking sector, as well as a substantial and rapid increase in money supply in the economy, which led to high inflation, do not adequately control which has caused all the subsequent problems.
At a time when it became obvious that the banking sector in Kazakhstan has become one of the drivers of the economy, increasingly began to appear on the opinion of the need to lower interest rates on credit resources to accelerate economic growth. Although the administrative drop in prices for loans should have been cause a reduction in profitability and care of the players from the market, the government is not worried, because it was thought that for the fifteen millionth of the country there are three dozen (profitable) banks is more than sufficient. Surprisingly, after a series of interest rate cuts to reduce the number of banks has not happened. Banks have found a way to attract cheap foreign funding, and eventually the number of banks over time has not decreased but increased.  While it might seem that the lowering of interest rates on loans will not led to some negative results and was associated exclusively with positive implications.  In fact, credit becomes more available, people - tolerant, whereas the number of banks engaged in economy, grew, so visually it looked favorable. However, in practice it was not. Over time, cheap credit made Kazakh banks too risky: the share of customer deposits has been steadily declining, dependence on fixed-term funding to grow assets and liabilities are highly dollarized. 
It should be noted that non-market lower interest rates in addition to the negative impact on the risk of the banking sector adversely affected the job market securities. It was not profitable to attract financial resources in the stock market at rates significantly higher than in the banking sector. Thus, the securities market of Kazakhstan (the corporate portion) left in oblivion for many years, while the banking sector has become a full monopoly in the distribution of capital in the economy. 
As a result banks of the country borrowed a big sum of money from foreign countries .In September, 2007 the size of debt was approximately 50 million of dollars. Moreover the financial sector of Kazakhstan was the biggest borrower in structure of the government external debt. The growth strategy of most Kazakh banks in that time was simple: they raised cheap short-term debt on European capital markets denominated in Euro and dollars, and used the funds to provide credit to the growing customer base in Kazakhstan at a much higher interest rate.
It led to...

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