Georgina Muchoki

https://www.wsj.com/articles/a-new-way-to-spot-the-next-financial-crisis- https://www.marketwatch.com/story/heres-how-to-spot-the-next-financial-crisis- The Tech Revolution Means Better Models For Identifying Financial Crisis A lot of households and businesses are struggling with over expenditure, which does not commensurate to their earnings. According to chief economist Jan Hatzius, U.K. and Canada are some of the countries, which hit hard by a financial crisis. However, Hatzius says that the private sector seems to have some balance and particularly that of the United States. This is contrary to what is happening in the Canadian private sector, which is reportedly spending more. However, there seems to be a more realistic way of saving the financial world. Together with a U.S. federally-funded research company Mitre Corp, modeling. U.K.-based startup Simudyne has established an agent-based model. The model will benefit big banks, funds, and regulators, which will turn into a commercial product. The model is for emerging markets The traditional financial models have been using a few generalized rules. However, things will be different with the agent-based model. It will not only help economists in analyzing the market but it will also help in stimulating market activities. It is primarily targeting the emerging markets and in the long run, it will create dynamic computer programs. There are expectations that it will help regulators spot financial crisis potholes some of which were experienced in 2008. The Simudyne-Mitre system can handle hundreds of millions of agents Investors and regulators have been on the look for alternatives, which can rescue the falling financial world. Apparently, the likes of the Simudyne-Mitre system has been used in ecological research and military war games until when a restriction came through. Nonetheless, its capabilities are worth mentioning. For example, it is able to handle hundreds of millions of agents, hedge funds, investors and lenders. Previously, it was not possible to create a large, complex model and mainly in the financial world. All in all, model makers can now explore the opportunity of being able to rent computing power, thanks to cloud computing. All said and done, there is hope of pulling out from the use of traditional financial models. On the other hand, investors should not assume that the sophistication of agent-based models will do away with all the financial risks.