One of the bedrocks of our financial system is financial innovation and financial innovation is the life blood of efficient and responsive capital markets. The last 25 years have witnessed acceleration in the process of financial innovation. This has been spurred largely by increased volatility...

What sows the seeds of financial crises and what policies can help avoid them? To address these questions, I model the interaction between the ex-ante production of assets and ex-post adverse selection in financial markets. My results indicate that taking into account the endogenous asset supply...

What sows the seeds of financial crises, and what policies can help avoid them? I model the interaction between the ex-ante production of assets and ex-post adverse selection in financial markets. Positive shocks that increase market prices exacerbate the production of low-quality assets and can...

Finanzmärkte sind zu einem bedeutenden Phänomen der modernen Gesellschaft geworden. Das Buch führt in die Märkte für Kapital ein, vor allem in die Märkte für Wertpapiere, Vermögenspositionen, Zertifikate und Kontrakte.(Verlagstext)

This Essay discusses two historical parallels between the current financial crisis and the financial crisis of the late 1920s and 1930s. First, financial innovation was at the core of both crises. In particular, the machinations of Ivar Kreuger illuminate how financial innovation tends to...