INESAD
FINANCIAL ECONOMICS is the branch of economics that focuses on the analysis and study of the financial system. At the macroeconomic level, this branch studies the causal relationships between credit, investment and economic growth. At the microeconomic level, it studies the behavior of different financial institutions, such as banks or mutuals, in relation to financial crises, risk management, liquidity or solvency problems, and exposure to runs and panics.
It is commonly said that “money makes the world go round“, which is evidence of how our economic system works: We cannot buy goods without money; we cannot invest without money; we cannot hire workers without paying them a salary in money. Money is, in fact, the core of our economic system. In this sense, financial intermediaries and the central bank play very important roles in the monetary economy by creating money.
The purpose of the area of FINANCIAL ECONOMICS is to analyze the stability and performance of financial institutions, financial risk management, diversification of investment portfolios or credit portfolios, financial regulation, financial inclusion, the state of financial education and the effect of financial products or services on the economic vulnerability of financial consumers.
Projects
- Impact of COVID-19 on the financial intermediation system: The coronavirus pandemic has generated a long-term recession, the impact of which no country has been able to avoid, regardless of the containment strategy implemented. The financial intermediation system has been one of the most affected because the economic consequences materialized only two weeks after the declaration of a national health emergency and quarantine. Therefore, the objective of the study is to estimate the effect of COVID-19 on the financial performance of financial intermediation entities.
- Relationship between financial performance and the real sector: The objective is to analyze the relationship between investment and credit. On the one hand, within the framework of the so-called supply-leading hypothesis, which argues that financial development stimulates economic growth, i.e., the expansion of financial institutions leads to economic growth. On the other hand, considering the demand-following hypothesis, which states that consumption and investment decisions determine income and, therefore, savings. The results of the causal relationship are crucial for the design of economic recovery policies.
- Effects of global financial crisis: The aim of the project is to analyze the capacity of the Bolivian economy to counteract the negative effects of the global crisis, which will depend on several factors, such as the severity and duration of the crisis and, above all, the quality of the policies that policy makers will implement to deal with it.
