SMART JOURNAL OF BUSINESS MANAGEMENT STUDIES	VOL. 15	NO. 2	PAPER 2
10.5958/2321-2012.2019.00010.1
GLOBAL ECONOMIC DOWNTURN: THE IMPACT OF FINANCIAL PRUDENCE
Jebamalai Vinanchiarachi
*    Former Principal Adviser to the Director General of United Nations Industrial Development Organization (UNIDO), Vienna, Austria
An attempt has been made in this paper, to gauge the magnitude, of financial crises during certain periods. Dwelling on the lessons, learned from financial interventions during the Great Depression of the 1030s, a few lessons were drawn with a view to avoiding future financial crises. Other financial crises, which triggered national and global economic downturns and financial interventions made during those periods, also dictated different lessons which were distinctly different from the lessons of the past, offering an array of financial interventions. The paper argues against over belief in market forces as they fail to ensure atomicity in creating desired results automatically. The paper also argues the case for strong market-based public activism and regulatory governance for ushering in financial and economic stability. The developmental State will need to put in place proactive regulatory framework, to guard against arbitrage and forbearance, in order to control financial market excesses which are often triggered by speculation and derivatives. This is indeed the panacea for ushering in the impact of financial prudence during the downturns of economies.

KEYWORDS: Depression, Financial crisis, Interventions, Market forces, Bailout, Financial prudence, Recovery, Financial market, Speculation, Derivatives

JEL CLASSIFICATIONS: F02, F36 and F62

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