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THE COLLAPSE OF BARINGS BANK

The Collapse of Barings 1995. Financial Derivatives, Banking Crises and Contagion Effects

Freiberg Working Papers, (1996), Vol. 96/2, 35 pages, ISSN 0949-9970

Jan Koernert

Abstract

Banks solvency and liquidity can be significantly threatened if speculative trading in financial derivatives is guided by a lack of adequate internal and external controls. There is evidence that such reasons are responsible for the failure of Barings in February 1995.

This study takes a closer look into the circumstances of the collapse of Barings and analyses why no contagion effects occurred which could have led to a system-wide destabilisation.

JEL-classification: G 21, G 33, G 38


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