Financial market instability arises when market prices exhibit an amplified reaction to underlying shocks, whether fundamental or non-fundamental. These factors include investors learning from prices when making trading decisions, and various channels for strategic integration among investors that work against price-motivated strategic alternatives. Recent studies have shown the impact of the global financial crisis; for instance, countries whose banks lent in the local currency based on local deposits were less susceptible to credit crises than others. Previous academic studies have used a standard framework for trading in financial markets, providing an overview of the forces that cause market fragility.
Dr. Abdel Azim Hanafi
