In an Emerging Market Economy, a Lending Boom and Crash

question 16

Essay

In an emerging market economy, a lending boom and crash are not inevitable outcomes of financial liberalization and globalization. Discuss when a boom and crash will occur, and how it can be avoided.

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Definitions:

Elastic Artery

A type of artery that contains a high proportion of elastic tissue, allowing it to stretch in response to each pulse and help maintain blood pressure.

Muscular Artery

A type of medium-sized artery that has a thicker muscular layer, which allows for regulation of blood flow by contracting or dilating.

Arteriole

A small diameter blood vessel in the microcirculation that extends and branches out from an artery and leads to capillaries.

Ascending Aorta

Part of the aorta from which the coronary arteries arise.