Was the recent global financial crisis symptomatic from the challenges of liberalisation of financial markets in Uganda?
| Published date | 19 July 2011 |
| Date | 19 July 2011 |
| DOI | https://doi.org/10.1108/13685201111147531 |
| Pages | 225-237 |
| Author | Norman Mugarura |
| Subject Matter | Accounting & finance |
Was the recent global financial
crisis symptomatic from the
challenges of liberalisation of
financial markets in Uganda?
Norman Mugarura
Global Action Research and Development Initiative (Garadi) Ltd,
London, UK
Abstract
Purpose – The recent global financial crisis has demonstrated the susceptibility of local economies to
the global market system and its idiosyncrasies. While liberalisation of financial markets was initially
deemed essential to ease access to cheap capital, it has demonstrated the potential to engender
instabilities in the regulatory system. With reference to financial markets regulatory challenges in
Uganda, this paper aims to explore how a liberalised market economy can also be exploited to
perpetuate corruption and other financial malpractices.
Design/methodology/approach – This paper explores the challenges to financial markets
liberalisation in the absence of effective oversight institutions. Specifically, it draws on experiences
of liberalisation of financial markets in Uganda to examine how that country’s experience and its
antecedents in the wider financial system could have signposted the threat of another financial
crisis.
Findings – While acknowledging the importance of financial markets to development, this paper
contends that opening markets should be preceded by tailored requisite reforms locally, to caution
local economies against destabilising spontaneous movement of capital in and out of the system.
Similarly, a liberalised financial market system and under-regulation in financial markets can
potentially engender a fluid environment inimical to the stability of global markets.
Originality/value – The paper has examined these issues in the narrow context of the challenges
of financial markets liberalisation in Uganda. It will be inferred that the recent global financial
crisis should have been foreseen from the earlier antecedents, and economies cautioned against it
properly.
Keywords Financial crisis,Liberalization, Financialmarkets, Uganda
Paper type Research paper
1. Introduction
The global financial crisis (2007-2010) is said to have began in the USA, spreading to
Europe due to globalisation of markets and its ubiquitous ethos. This crisis clearly
demonstrated how events and activities in one part of the globe could come to have
far-reaching and significant consequences for distant communities elsewhere. If the
problem was confined in one place where it originated, it would have been purely an
American problem and little of anybody else concern. The crisis was triggered by
liquidity shortfall in the US sub-prime markets and the banking system. Through
innovative financial products, risks are said to have been repackaged as derivative
products and sold to European markets[1]. As a result, this changed the dynamics of the
problem to the current euphemism of “we are all in it together.” Globalisation has always
been fronted on the premise that “global problems require global solutions.” In theory,
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1368-5201.htm
Global
financial crisis
225
Journal of Money Laundering Control
Vol. 14 No. 3, 2011
pp. 225-238
qEmerald Group Publishing Limited
1368-5201
DOI 10.1108/13685201111147531
To continue reading
Request your trial