There has been a double whammy of sorts with COVID-19 being declared a pandemic and the financial markets crashing across the world. Amid all this mayhem it is easy to lose focus of the horizon.
In the recently published article Shailesh Dhuri, CEO Decimal Point Analytics discusses some of the apparent similarities between the Great Financial Crisis of 2008 and the emerging situation at present. He talks about how the financial mavericks push products in the market without stress testing them and when the market conditions turn unfavorable these products fail and jeopardize the entire world economy.
Last time it was a pool of uncorrelated junk grade loans and this time it is a pool of illiquid assets traded by an algorithm at high frequency. The only difference being COVID-19 has triggered the crash this time.
What has changed due to COVID-19? This pandemic has disturbed supply chains and demand patterns beyond what was deemed feasible. In this world of JIT supply chains, the current disruption is exerting tremendous working capital demand from the real economy on the financial sector. The central bankers are reacting by providing liquidity, but the disruption is so large the demand for liquidity from real economy far exceeds supply. However, Shailesh believes there is more to this story.
Click on the below link to read the full article https://www.decimalpointanalytics.com/resources/blog-detail/17-march-2020/397
About Decimal Point Analytics
Decimal Point Analytics is a financial research and analytics company incorporated in 2003 with headquarters at Mumbai. It is an independent, management owned company, which provides actionable analytics to financial services companies. It offers customized solutions to investment management businesses that address specific challenges. It enables these customers to supplement their operations with additional resources and augment research processes using Artificial Intelligence (AI) technologies like Machine Learning (ML), Natural Language Processing (NLP) and Big Data.
Decimal Point Analytics has presence across four global locations including the United States, UK and India.
Visit the website at www.decimalpointanalytics.com.