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The spectacular failure of the 150-year old investment bank Lehman Brothers on September 15th, 2008 was a major turning point in the global financial crisis that broke out in the summer 2007. Through the use of stock market data and Credit Default Swap (CDS) spreads, this paper examines the...
Persistent link: https://www.econbiz.de/10010899300
The post-crisis financial reforms address the need for systemic regulation, focused not only on individual banks but … minimum universal levels of capital and remains mainly microprudential in its focus rather than being macroprudential. An … systemic risk. Moreover, bank regulation is considered in a two-scale level, either at the bank level or at the system …
Persistent link: https://www.econbiz.de/10010899303
The 2007/08 financial crisis results in two major problems that issue difficult challenges for the economic theory and policy. The first challenge is the rise of unemployment notwithstanding growing imbalances of budget deficits. The second is the monetary and financial instability threatening...
Persistent link: https://www.econbiz.de/10010898561
This essay develops the financial instability hypothesis of Hyman Minsky through an analysis of the pitfalls of the liberal regulatory framework in order to deal with long-standing and long-lasting financial issues of capitalist economies. It argues that the roots of the 2007/08 crisis are...
Persistent link: https://www.econbiz.de/10010899268
observed that periods of financial instability are common and it is the government's massive interventions since the World War …. Minsky believed that regulation should be linked to the structure of the financial system and effective policy making …
Persistent link: https://www.econbiz.de/10010820974
The aim of this paper is to evaluate the economic consequences on the countries that on one hand protect themselves from future financial crises by accumulating international reserves (IR) while on the other hand expose themselves to severe financial crisis due to their excessive internal and/or...
Persistent link: https://www.econbiz.de/10010899523
adapted to the (Post)Keynesian representation of the real world are therefore also suggested. …
Persistent link: https://www.econbiz.de/10008794314
The paper states that, although Post Keynesian interest rules may be feasible and sustainable in favourable circumstances, there is a shared difficulty as for the setting of long-term interest rates in a context of strong uncertainty and shifting liquidity preference. According to Keynes theory...
Persistent link: https://www.econbiz.de/10008794750
We propose a tractable framework for quantifying the impact of fire sales on the volatility and correlations of asset returns in a multi-asset setting. Our results enable to quantify the impact of fire sales on the covariance structure of asset returns and provide a quantitative explanation for...
Persistent link: https://www.econbiz.de/10010548433
Risk diversification is the basis of insurance and investment. It is thus crucial to study the effects that could limit it. One of them is the existence of systemic risk that affects all the policies at the same time. We introduce here a probabilistic approach to examine the consequences of its...
Persistent link: https://www.econbiz.de/10010899196