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April 4 , 2007
DH 07 JH50
Contact: Joanie Harmon-Whetmore
Professor of Finance Co-Edits Book on Global Financial Crises with Nobel Laureate
Carson, CA - Tayyeb Shabbir, associate professor of finance, developed and edited Recent Financial Crises: Analysis,
Challenges and Implications (Northampton, Edward Elgar Publishing, 2007) with Nobel Laureate Lawrence Klein.
Shabbir, who arrived at CSUDH in the fall of 2006 after teaching at the University of Pennsylvania's Wharton
School of Business, collaborated with his former instructor and colleague on the book.
Klein won the 1980 Nobel Prize winner in Economic Sciences for his career in global econometric modeling.
Klein and Shabbir started working on Recent Financial Crises nearly four years ago while they were still
colleagues at the University of Pennsylvania. The collaboration continued when Shabbir began teaching at CSUDH,
until the book’s release last February.
The volume features ten original never-before published papers by eminent economists and financial experts
analyzing different aspects of financial crises, with a special focus on the lessons to be learned from the
Asian financial crisis of the late 1990s. Shabbir and Klein also contributed their own paper to the book,
“Asia before and after the Financial Crisis of 1997-98: A Retrospective Essay.”
“When these types of financial crises occur,” says Shabbir, “they have a grave impact which is often multi-faceted.
Beyond economic losses, they can precipitate social and political problems that are not just matters of academic
interest, but become pressing issues of public concern.”
The 1997-98 financial crisis originated in Thailand with the devaluation of the Thai baht, igniting a chain reaction
that spilled over to South Korea, Malaysia, Indonesia, China, Hong Kong, and Singapore. Shabbir links the difficulties to the fact
that in the 1990s, many of the Asian countries had their currency fixed in terms of the U.S. dollar. He also says
that many economists used to hold the opinion that a fixed exchange rate can safeguard against a volatile global
economy and attract foreign investment. However, he warns that this kind of thinking has undergone
a radical change in light of these crises.
“The U.S. dollar
is generally accepted as credible and stable," Shabbir points out. "The Thai government was apparently very confident of what was going
to happen with their fixed exchange rate. However, whenever you meddle with the market forces, there is a danger
that you are going to be seriously misaligned. Instead, the market forces should dictate fundamental value – or,
at least, not wait till the bitter end to relieve pressure from the relevant market forces.”
Shabbir stresses that the book is not merely retrospective in its analysis, but emphasizes what potential pitfalls
should be avoided by emerging economies such as China and India in their race to become economic powerhouses. He
maintains that the analyses of financial crises stress the importance of avoiding structural imbalances and crises
of confidence, key issues in examining budget deficits and state of the health of sub-prime mortgage lending in the U.S. He further underscores the value of learning from financial crises across the globe, saying, “Countries like those in East Asia are major economic players. Anything that happens in those countries affects everyone. Many of these countries are customers of the U.S. If your customers become poorer, it’s obviously going to affect you, so you want them to be in good health, in order to keep your own economy growing.”
Shabbir’s research focus is on the analysis, containment, and prevention of financial crises such as the one
described in the book. He is also interested in studying corporate financial distress and possible recovery,
the housing and lending markets, and the growing area of microfinance and entrepreneurial finance.
Since his arrival on the Dominguez Hills campus, Shabbir has been very impressed by the University’s commitment
to its students, learning outcomes, and maintaining a balance between teaching and research. He is very appreciative
of this opportunity to teach first-generation college students.
“They are extremely enthusiastic and motivated about learning,” he says. “I was very impressed indeed by the fact
that the students are so hungry for learning, so motivated, and so enthusiastic about learning opportunities. For
a teacher, these are the greatest gifts. I am really excited to be a part of their learning experience.”
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