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The Impact of the Subprime Financial Crisis on the Transition and Central Asian Economies: Causes and Consequences

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An Assessment of the Global Impact of the Financial Crisis

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Abstract

The subprime crisis precipitated the worst recession amongst the OECD countries since the Second World War. Although the value of subprime assets as a proportion of total financial assets was relatively small, the excessive leverage of many US and UK financial institutions, the marked revaluation of the risk associated with securitised assets, together with the collapse in world trade, meant that the 2008–10 crisis was the worst since the Great Depression of 1929. Moreover, contagion effects, especially those initiated through the freezing of the interbank and international financial loans markets, meant that the impact of the crisis extended far beyond those relatively few countries (especially the US and UK) whose banks were holders of the ‘toxic assets’.1 In this chapter the impact of the financial crisis on the European Union Transition Economies (TEs) and the transition Central Asian Economies (CAEs) is examined.2 Particular attention is paid to the financial transmission mechanism that was crucial in determining the impact of the crisis on the TEs.

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Authors
  1. Nigel F. B. Allington
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  2. John S. L. McCombie
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Editor information

Editors and Affiliations

  1. Cambridge Centre for Economics and Public Policy, Department of Land Economy, University of Cambridge, UK

    Philip Arestis (Professor of Economics, Distinguished Adjunct Professor of Economics, Senior Scholar, Visiting Professor, Professorial Research Associate, British Hispanic Foundation ‘Queen Victoria Eugenia’ British Hispanic Chair of Doctoral Studies, Chief Academic Adviser) (Professor of Economics, Distinguished Adjunct Professor of Economics, Senior Scholar, Visiting Professor, Professorial Research Associate, British Hispanic Foundation ‘Queen Victoria Eugenia’ British Hispanic Chair of Doctoral Studies, Chief Academic Adviser)

  2. Department of Applied Economics V, Universidad del País Vasco, Spain

    Philip Arestis (Professor of Economics, Distinguished Adjunct Professor of Economics, Senior Scholar, Visiting Professor, Professorial Research Associate, British Hispanic Foundation ‘Queen Victoria Eugenia’ British Hispanic Chair of Doctoral Studies, Chief Academic Adviser) (Professor of Economics, Distinguished Adjunct Professor of Economics, Senior Scholar, Visiting Professor, Professorial Research Associate, British Hispanic Foundation ‘Queen Victoria Eugenia’ British Hispanic Chair of Doctoral Studies, Chief Academic Adviser)

  3. Department of Economics, University of Utah, USA

    Philip Arestis (Professor of Economics, Distinguished Adjunct Professor of Economics, Senior Scholar, Visiting Professor, Professorial Research Associate, British Hispanic Foundation ‘Queen Victoria Eugenia’ British Hispanic Chair of Doctoral Studies, Chief Academic Adviser) (Professor of Economics, Distinguished Adjunct Professor of Economics, Senior Scholar, Visiting Professor, Professorial Research Associate, British Hispanic Foundation ‘Queen Victoria Eugenia’ British Hispanic Chair of Doctoral Studies, Chief Academic Adviser)

  4. Levy Economics Institute, New York, USA

    Philip Arestis (Professor of Economics, Distinguished Adjunct Professor of Economics, Senior Scholar, Visiting Professor, Professorial Research Associate, British Hispanic Foundation ‘Queen Victoria Eugenia’ British Hispanic Chair of Doctoral Studies, Chief Academic Adviser) (Professor of Economics, Distinguished Adjunct Professor of Economics, Senior Scholar, Visiting Professor, Professorial Research Associate, British Hispanic Foundation ‘Queen Victoria Eugenia’ British Hispanic Chair of Doctoral Studies, Chief Academic Adviser)

  5. Leeds Business School, University of Leeds, UK

    Philip Arestis (Professor of Economics, Distinguished Adjunct Professor of Economics, Senior Scholar, Visiting Professor, Professorial Research Associate, British Hispanic Foundation ‘Queen Victoria Eugenia’ British Hispanic Chair of Doctoral Studies, Chief Academic Adviser) (Professor of Economics, Distinguished Adjunct Professor of Economics, Senior Scholar, Visiting Professor, Professorial Research Associate, British Hispanic Foundation ‘Queen Victoria Eugenia’ British Hispanic Chair of Doctoral Studies, Chief Academic Adviser)

  6. Department of Finance and Management Studies, School of Oriental and African Studies (SOAS), University of London, UK

    Philip Arestis (Professor of Economics, Distinguished Adjunct Professor of Economics, Senior Scholar, Visiting Professor, Professorial Research Associate, British Hispanic Foundation ‘Queen Victoria Eugenia’ British Hispanic Chair of Doctoral Studies, Chief Academic Adviser) (Professor of Economics, Distinguished Adjunct Professor of Economics, Senior Scholar, Visiting Professor, Professorial Research Associate, British Hispanic Foundation ‘Queen Victoria Eugenia’ British Hispanic Chair of Doctoral Studies, Chief Academic Adviser)

  7. UK Government Economic Service (GES) on Professional Developments in Economics, UK

    Philip Arestis (Professor of Economics, Distinguished Adjunct Professor of Economics, Senior Scholar, Visiting Professor, Professorial Research Associate, British Hispanic Foundation ‘Queen Victoria Eugenia’ British Hispanic Chair of Doctoral Studies, Chief Academic Adviser) (Professor of Economics, Distinguished Adjunct Professor of Economics, Senior Scholar, Visiting Professor, Professorial Research Associate, British Hispanic Foundation ‘Queen Victoria Eugenia’ British Hispanic Chair of Doctoral Studies, Chief Academic Adviser)

  8. Brazilian School of Public and Business Administration, Getulio Vargas Foundation, Brazil

    Rogério Sobreira (Associate Professor of Economics and Finance, CNPq Researcher) (Associate Professor of Economics and Finance, CNPq Researcher)

  9. University of Brasilia (UnB), Brazil

    José Luis Oreiro (Associate Professor of Economics, Level I Researcher, Director, Member of the Editorial Board of the Brazilian Journal of Political Economy (REP) (Associate Professor of Economics, Level I Researcher, Director, Member of the Editorial Board of the Brazilian Journal of Political Economy (REP)

  10. National Scientific Council (CNPq/Brazil), Brazil

    José Luis Oreiro (Associate Professor of Economics, Level I Researcher, Director, Member of the Editorial Board of the Brazilian Journal of Political Economy (REP) (Associate Professor of Economics, Level I Researcher, Director, Member of the Editorial Board of the Brazilian Journal of Political Economy (REP)

  11. Brazilian Keynesian Association (AKB), Brazil

    José Luis Oreiro (Associate Professor of Economics, Level I Researcher, Director, Member of the Editorial Board of the Brazilian Journal of Political Economy (REP) (Associate Professor of Economics, Level I Researcher, Director, Member of the Editorial Board of the Brazilian Journal of Political Economy (REP)

Copyright information

© 2011 Nigel F.B. Allington and John S.L. McCombie

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Allington, N.F.B., McCombie, J.S.L. (2011). The Impact of the Subprime Financial Crisis on the Transition and Central Asian Economies: Causes and Consequences. In: Arestis, P., Sobreira, R., Oreiro, J.L. (eds) An Assessment of the Global Impact of the Financial Crisis. Palgrave Macmillan, London. https://doi.org/10.1057/9780230306912_8

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