Found 2 article(s) for author 'Economic and Financial Crises'

Connectedness and Contagion: Protecting the Financial System from Panics

Connectedness and Contagion: Protecting the Financial System from Panics. Hal Scott, May 2016, Book. “The Dodd–Frank Act of 2010 was intended to reform financial policies in order to prevent another massive crisis such as the financial meltdown of 2008. Dodd–Frank is largely premised on the diagnosis that connectedness was the major problem in that crisis—that is, that financial institutions were overexposed to one another, resulting in a possible chain reaction of failures. In this book, Hal Scott argues that it is not connectedness but contagion that is the most significant element of systemic risk facing the financial system. Contagion is an indiscriminate run by short-term creditors of financial institutions that can render otherwise solvent institutions insolvent. It poses a serious risk because, as Scott explains, our financial system still depends on approximately $7.4 to $8.2 trillion of runnable and uninsured short-term liabilities, 60 percent of which are held by nonbanks.Link

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Does Economic Inequality Cause Crises?

Does Economic Inequality Cause Crises? Edward Glaeser, December 14, 2010, Paper. “Did inequality cause the recent housing and financial crisis? For decades, a growing literature has tried to establish links between inequality and adverse outcomes, such as low economic growth,weak social cohesion and mortality and, most recently, financial crises. If true, these arguments would provide even more reasons to worry about our unequal income distribution. If false, we should still worry about income inequality, because in a just society everyone should have a decent standard of living and the opportunity to succeed. Empirically, it is true…” Link

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