The Global Crisis and the Governance of Power in Finance

Gary A. Dymski

Chapter 4 in The Financial Crisis, 2011, pp 63-86 from Palgrave Macmillan

Abstract: Abstract This chapter argues that resolving the nearly global crisis of financial systems — and, by extension, of macroeconomic stagnation — depends on recognising and responding to the considerable, multidimensional power accumulated by the very financial firms whose dysfunctionality helped create that crisis in the first place. The power of finance, and especially that of the mega-institutions at the heart of the modern financial system, has grown steadily in the past 45 years. Much of the celebrated innovation of these institutions has involved capturing more operational leverage by accessing more liquidity. In the end, the success of these strategies, via competitive global deregulation and the creation of new methods of risk-shifting and risk-taking, ended by compromising global liquidity just when it was most needed.

Keywords: Financial Market; Financial Crisis; Financial System; Moral Hazard; Hedge Fund (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-30394-2_4

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DOI: 10.1057/9780230303942_4

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