The Subprime Crisis Is Not a Normal Crisis

Chi Lo

Chapter 1 in China After the Subprime Crisis, 2010, pp 13-25 from Palgrave Macmillan

Abstract: Abstract In my view the subprime crisis is not a normal crisis, and so its recovery trajectory is going to be different from anything we have seen before. We are in uncharted territory, so history may not be an appropriate guide for how things will unfold in the post-subprime world. This is perhaps a common theme that both the developed and developing worlds should focus on. For China, understanding the nature of this global ‘credit quake’ is especially crucial, as it is in the process of liberalising the financial (notably insurance) sector. For the western world, there is no consensus over whether or not this crisis is just another normal financial crisis. There is also a tendency to look backward to find clues to what is going to happen in the post-crisis world. This could be wrong.

Keywords: Financial Institution; Balance Sheet; Risky Asset; Risk Tolerance; Financial Innovation (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-29896-5_2

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DOI: 10.1057/9780230298965_2

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