Financial Crises and Impacts of Recent Financial Crises on Sri Lanka
Central Bank of Sri Lanka, LK
Dr. W.M. Hemachandra is an Assistant Governor of the Central Bank of Sri Lanka. He received a B.Sc. (Business Adm.) First Class (Hons.) Degree from Sri Jayawardenapura University of Sri Lanka, a Diploma in Accountancy from the Sri Lanka Technical College, an MA in Economics from the Simon Fraser University, Canada and a Ph.D in Economics from the University of Colombo, Sri Lanka. His research interests are in the area of Macroeconomic Policies, Quantitative Economics, Debt Management and Financial Markets/Institutions, Monetary and Financial Policy and Payments and Settlement Issues.
The subject of financial crises has been widely addressed in the current literature. A series of researches has been conducted, and substantial volume of literature is available worldwide on various aspects of financial crises. This paper describes, among other things, about the Sri Lankan situation in regard to financial crises, particularly the recent crisis started in the United States of America (US). The paper briefly explains different views of financial crises that have evolved around the world. It identifies some possible causes of financial crises based on the experiences faced by different countries while presenting case studies explaining financial/economic crises in Argentina, Chile, Mexico, South-East Asia and the latest in the US. As regards the US crisis, a reference has been made to effects of the crisis and the responses made by the authorities to resolve it. The paper also highlights some lessons that could be learnt from the US financial crisis. In relation to Sri Lanka, this paper presents a description under four sub-topics, i.e., a brief account of the previous financial crises in Sri Lanka, effects of the recent US crisis on the Sri Lankan economy, the measures that contributed to minimise the impact of the US crisis on the Sri Lankan economy and how the Sri Lankan economy revived.