Some Reflections on the Recent Financial Crisis

Gary Gorton

No 18397, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Economic growth involves metamorphosis of the financial system. Forms of banks and bank money change. These changes, if not addressed, leave the banking system vulnerable to crisis. There is no greater challenge in economics than to understand and prevent financial crises. The financial crisis of 2007-2008 provides the opportunity to reassess our understanding of crises. All financial crises are at root bank runs, because bank debt--of all forms--is vulnerable to sudden exit by bank debt holders. The current crisis raises issues for crisis theory. And, empirically, studying crises is challenging because of small samples and incomplete data.

JEL-codes: E02 E3 E30 E32 E44 G01 G1 G2 G21 (search for similar items in EconPapers)
Date: 2012-09
New Economics Papers: this item is included in nep-ban, nep-cba, nep-fdg, nep-his, nep-hpe, nep-mac and nep-mon
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Published as Trade, Globalization and Development 2014, pp 161-184 Date: 19 Jun 2013 Some Reflections on the Recent Financial Crisis Gary Gorton

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