Sub-prime crisis and financial innovation

Paolo Mottura
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Paolo Mottura: Università Bocconi di Milano

BANCARIA, 2008, vol. 2, pages 2-23

Abstract: The current great financial crisis points out the weakness of the originate to distribute model based on the definition by the global banks of a selling chain that is opaque, elusive and unsustainable. The reaction to the crisis must be wide and global: de-engineering of financial instruments, transparency, relationship lending, banks re-capitalization, supervision rethinking and rating. The aim must be the change of the business model from a short time perspective to a medium-long term strategy: indexes on profitability of banks and managerial fees must not be constructed on short time horizon considering all the life cycle of the risk and the market has to recognize the value of a strategy that considers both innovation, performance and financial ethics.

Keywords: financial crisis; innovation; ethics; transparency; capital adequacy (search for similar items in EconPapers)
JEL-codes: G01 G21 G24 (search for similar items in EconPapers)
Date: 2008

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