Shall We Keep Early Diers Alive?
|Shall We Keep Early Diers Alive?
|Year of Publication
|978 88 8467 912 3
|Diabolic loop, financial crises, Originate to distribute, Shadow banking
Most extant explanations of financial crises emphasise the role played by negative shocks on the liability side of a bank’s balance sheet. The vast literature on bank runs induced policy makers to build up a reputation as institutions willing to do anything to support the orderly fulfillment of depositors’ and interbank claims. Nonetheless, the LTCM crisis of 1998 and the Subprime crisis of 2007 are compelling examples of how the banking industry is prone to systemic disruptions even without preference shocks or domino effect. This survey argues in favour of the still marginal literature on financial crises unfolding through the asset side of banks’ balance sheets.