Finance Essay Example | Topics and Well Written Essays - 2250 words - 4

Finance - Essay Example ralian dollar, as well as the interest rates as apparent in the situation of the housing market, and the unemployment situation in the mining industry. Lastly, this paper looks at the current efforts to regulate the financial markets. The sources of data include article from online versions of major newspapers such as the Australian, as well as articles from global financial institutions such as the World Bank and Overseas Development Institute. Other legitimate sources such as the website of the Australian government have been utilized. The bulk of the sources include academic journals such as Financial Management, McKinsey Quarterly, Cambridge Journal of Economics, etc., that tackle the issue of global financial crisis, from databases such as Business Source Premier, Oxford Journals and ABI Inform. The invisible hand view of the economy, as explored in the book â€Å"Economics† by Samuelson and Nordhaus, will fail to exist under two conditions: when there is imperfect competition and imperfect information, and when there are market externalities. The failure in major financial markets exists because of either of these conditions. Prior to the financial crisis, the financial markets such as stocks, bonds and mutual funds markets are considered markets where the invisible hand operates. The stock market has always been referred to as an efficient market by economists. According to Brealey, Myers and Marcus, â€Å"the competition [in this market] to find misvalued stocks is intense. So when new information comes out, investors rush to take advantage of it and thereby eliminate any profit opportunities (2004, 165).† An efficient market, according to Samuelson and Nordhaus in their book â€Å"Economics† is defined as â€Å"one where all new information is quickly understood by market participants and becomes immediately incorporated into the market prices (2004, 534).† This characteristic of the stock market as an efficient market is attributed to the availability of