Global economic disgovernance rather than governance characterizes today the world economy. Two facts substantiate this assessment: the recurring balance of payment crises in developing countries, and the present enormous current account deficit in the United States. The emergent markets’ crises are essentially the outcome of a strategy that the North proposed to the South: the growth cum foreign savings strategy. Given the fact that the inflow of capitals evaluate the exchange rate, and that the countries did not face major investment opportunities in the 1990s, such strategy led not to increase in capital accumulation and growth but to large current account deficits and to balance of payment (financial) crises. On the other hand, the US current account deficit is a serious problem. The US is already a debtor country, but adjustment continues to be postponed. Thus, the probability of a soft landing is small.
With nearly a billion people online and more connecting every month,the Internet is changing the way we do business. As with any new application in an age of rapid technological change, people and companies are embracing the possibilities in different ways and to different timetables.
Some construction companies are confidently using the Internet as an efficient and effective business too while others are less comfortable with the concept of e-business - the term itself is an example of the jargon which can act as a deterrent for the many individuals and organisations not yet immersed in this new technology.
There are different methods to calculate default probability of a portfolio. One can name Structural method of Merton, Reduced (non-structural) form, Scoring method and Hybrid model. Although, finding default probability is really important and can help lenders to protect themselves, calculating default correlation between exposures is as critical. Calculation of default correlation enables financial institutions to take into account the effect of diversification and also, gives them a better estimate of overall defaults. The goal of this research is to find the correlation between default risks of publicly traded Canadian companies in an overall loan portfolio. For this purpose, the CreditMetrics method that was described by J.P. Morgan is utilized.
