The stunning failure of a number of banks during the recent crisis has put regulatory intervention high on the agenda of governments. Adequate risk monitoring, including by credit rating agencies, measurement, and management have proven to be a daunting task, whereas regulation of innovative...

In this paper we discuss the main innovation in central bank cooperation during the financial crisis of 2008-09, namely the emergency provision of international liquidity through the establishment of bilateral central bank swap facilities, which have evolved to form interconnected swap networks....

Multi-fractal analysis is now widely used in medicine to distinguish healthy and pathological conditions (i.e., healthy and cancerous tissues). We follow the same approach for financial markets: fractal tools disclose hidden information from time series and allow the identification of market...

The financial crisis of 2007-2008 was a liquidity crisis. Thus we must both study the source of the crisis and evaluate the regulatory measures to address it. How was this liquidity crisis and its associated risk related to other forms of risk? What was the nature of the vicious cycle that...

This paper discusses the causes of the current banking crisis, arguing that it is primarily a crisis of confidence and not of bank assets quality, which is far better than either accounting statements or general media portrayal would have us believe. It then examines alternative public sector...

The majority of commentators, along with the public opinion, are inclined to identify the causes of the last financial crisis in a combination of traditional market and regulatory failures in the operation and regulation of financial markets. Whatever cannot be explained along these lines is...

Financial regulation today is largely framed by traditional business categories. The financial markets, however, have begun to bypass those categories, principally over the last thirty years. Chief among the changes has been convergence in the products and services offered by traditional...

A successful investment process requires a risk management structure that addresses multiple aspects of risk. In this paper, we lay out a best practices framework that rests on three pillars: risk measurement, risk monitoring, and risk-adjusted investment management. All three are critical. Risk...

This study takes a closer look at the role of risk (mis)management by financial institutions in the emergence of the Great Crash. It is explained that prior to the crisis too much reliance was placed on the quantitative side of risk management, while not enough attention was paid to qualitative...

The current financial crisis that threatens the entire world has created an ideal opportunity for educators. A number of important lessons can be learned from this financial meltdown. Some are technical and deal with the value of mathematical models and measuring risk. The most important lesson,...