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Table of contentsIntroductiondescription of methods and key figures of financial bubblesliterature and the contentmethods of predicting financial bubbles

subject of this research is the prediction of «financial bubbles». bubble is such a phenomenon on the financial market, when the assessments of people exceed the fair price. If this phenomenon is considered graphically, it could be characterized by a sharp deviation of course of good up from historical trend with the following collapse. This phenomenon could be recognized only by analyzing the market data, which makes the financial bubbles being very hard to predict. However, there are some typical features of occurrence of financial bubbles, due to which they could be distinguished from an ordinary rise of a price. There are two types of financial bubbles, which are necessary to separate. The first type occurs due to attempts to eliminate the lack of financial package. The second one appears, on the contrary, when there is an assurance that some sector would be successful, and investments, which are put in this sector, effect oppositely.theme is chosen because nowadays there are no effective methods of predicting and preventing the financial bubbles. There are different diverse perceptions and methods, based on previous observations, which can show some suspicious trends on markets. However, the state of the market could not be estimated only by analyzing share prices, because the information about the activity of different companies is mostly classified. theme has become significantly relevant during the last two decades. This might happen due to the fact that nowadays more and more stock-jobbers (speculators), who have the access to the market, earn on the differences in prices, which leads to the «swinging» of the market. In addition to this, it should be mentioned that during this period two financial bubbles took place: the USA subprime mortgage bubble (crisis) and, so called, the dot-com bubble.

The purpose of this research is to examine and to analyze comprehensively methods of predicting the emergence of financial bubbles, as well as figuring out the ways of development this methods.is also necessary to solve the following problems:

To examine the financial bubble from the point of time series analysis;

To examine the structure and the causes from the point of the institutional analysis;

To work out methods of predicting and their use in different situations;

To draw a conclusion concerning these methods and to structure the information.this moment, it is difficult to find particular methods of predicting the emergence of financial bubbles in the literature, since the topic is variable and there are many factors which begin to appear and influence the current system. That is why, it is necessary to keep the relevance of collected base of predicting methods, as well as enriching this base with new and developed methods. In connection to this, the problems, which are being solved in this research, would be of great current interest and new.paper (draft) describes the theoretical base of the future research, explains the basic definitions and operations taking place in the market. Moreover, it gives the full description of analysis tools and their applicability to the stated problems. Then, there is given a review of used literature on this topic, which is followed by the detailed plan of the research with the description of each item.

paper examines several approaches as to the predicting of financial bubbles as well as to the process of their occurrence. The basic two approaches are mathematical and institutional. Mathematical approach is necessary to search regularities, the reasons of occurrences and general features of financial bubbles. In this case, the entire model would be strictly mathematical, and the market would be considered only as the time series. On the other hand, institutional approach describes all the factors from the point of causes and consequences. This allows to make the approach of reasons of financial bubbles’ occurrence more comprehensive, which provides at the same time the ability to predict this phenomenon in more detail.of all, it is necessary to analyze financial bubbles from the point of institutional analysis. This means that it should be defined what influences on their occurrence. In this paper it is supposed that there are two types of «bubbles», which both occurs under the influence of a single factor - moral hazard.first type of the bubbles appears because of the attempt of eliminating the lack of financing. The second one occurs, by contrast, when some sector is believed to be successful, so all the money is invested in it, because it is considered to be the best investment at the moment. first case takes place when an agent borrows money for the further operation, but practically all the investments go to cover the previous debts. There are a lot of examples of this case when an absolutely legitimate organization becomes a kind of financial pyramid. Often this happened to the states. As a matter of fact, investors were sure in the timely assistance of the state’s economy by the IMF, in which they invested their money. However, the assistance had not been provided, which, consequently, led to the fact that states were forced to declare a default. However, if the investors had not been sure in the assessment of the IMF, they would not have invested the money, so there would not have been the main prerequisite for financial pyramid to have appeared. In such a way, yet being with debts the new investments would be borrowed on covering these debts, but the economy would be still in its normal state. In this particular case, it is the moral hazard, which leads the situation to occurrence of a financial bubble. The state, which is confident in

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