Financial Times

No significant direct impact on economy from global crisis

There is a very real possibility that the current global credit crisis will have no ‘significant direct impact’ on Sri Lanka’s economy, according to a senior Economist, Dr. Ranjith Bandara.

He suggested that this was because ‘Sri Lanka has only a minor relationship with the financial institutions that have got into difficulties, particularly in U.S.A.’ He further supported his view by referencing a recent Central Bank of Sri Lanka statement which noted that ‘the recent shock of the past and the new global financial shock has not affected Sri Lanka too adversely.’

These observations were made at ‘An Evening Seminar on Current Global Credit Crisis’, where Dr. Bandara was speaking on the potential impact of the credit crisis on Sri Lanka’s economy as well as how possible negatives could be counteracted.

The event was organized by the Merchant Bank of Sri Lanka, a subsidiary of the Bank of Ceylon allied with SBI Capital Markets Ltd of India.

As part of his exploration of the background of the global credit crisis, accountant Sujeewa Mudalige pointed to one of the root causes of the current crisis being U.S. and European banks’ movement away from reliable devices such as deposit mobilization. More recent trends such as aggregating loans and a system of credit swaps resulted in an environment where it was more commonplace for assets to be under-scrutinized and ultimately bundled together and traded on Wall Street.

He also identified other factors, all of which finally affected each other to cause this crisis, including: the transfer of risk from banks to mortgage brokers, home appraisers and ratings agencies; very little emphasis on the very real possibility of massive defaults of mortgage repayments; greater complexity of asset based securities such as Collateralized Debt Obligations (CDOs); and an unregulated environment for trading these securities which was more similar to a gambling contract than a trade.

Top to the page  |  E-mail  |  views[1]
Other Financial Times Articles
CPC in debt upto $20 mln a month
Foreign Minister to hold talks with ambassadors to push tea exports
LMSL - JKH probe by CID continues
Harry's attempt to appoint wife foiled - Stassens saga
AMW to fast-track projects
Cosy budget as losses mount at CPC
Is greed or stupidity the cause of the world's financial crisis ?
IMF commends Sri Lanka, stresses need to tackle inflation, other risks
Chillies strapped for cash
SriLankan Cares begins Rs. 51 mln school project in Hambantota
Drop in Indian tourists - Ministry
Some consumer benefits but serious issues linger
Budget not defending country from global economic crisis, say professionals and exporters
Japanese grant for women in North-East underutilised due to conflict
Entrepreneurship most vital part of social enterprises
Garment sector breaks trends: brings work to the village
Hayleys profits hit by tough business conditions
Garment industry expected to get smaller next year
Aitken Spence results weakened by tourism, boosted by transport
CCC to enhance trade with Jordan, Kuwait
First time participant ICTA bags unique Infotel award
Durdans new hospital to open in end 2009
CMC to issue trade licences in 25 days
Sri Lanka, low risk, but still vulnerable to faster HIV/AIDS growth
New venture to develop high tech software for mobile communication
SML appoints Sumedha Fernando as Director Marketing
Sri Lanka to sign international cybercrime prevention convention
The Reggies Ad awards now in its 5th year
LMS Oil Tank Farm operates at snails pace
Keells hotels unveils new career website
Domestic producers to gain; defence spending on the rise
CCI says budget broadbased
Software industry invests in new talent
The global crisis, tea and the Sri Lankan economy
Making fraud legal
Sri Lanka will face latest impact of global crisis
No significant direct impact on economy from global crisis
SEC looks into fund managers
Exterminator celebrates 10 years in business
CIMA flexible payment plans expands with HSBC
LOLC firm not yet CB approved - Clarification
CB to ‘bogus’ finance Cos. : Pay up or face stern action
Haycarb compelled to import charcoal
Anniversary bash at Jetwing Vil Uyana
NTB deposits, loans higher than industry trends in 9-mths to Sept.
Golden Key software wins medal
Sri Lanka wins bid to hold international chamber conference here
Hayleys MGT’s 1H profit dips despite revenue growth
Gem sector to reach US$ 1 bln export earnings in 2010-Minister


Reproduction of articles permitted when used without any alterations to contents and a link to the source page.
© Copyright 2008 | Wijeya Newspapers Ltd.Colombo. Sri Lanka. All Rights Reserved.| Site best viewed in IE ver 6.0 @ 1024 x 768 resolution