Open Problems and Conclusions

Victor Beker

Chapter Chapter 12 in Modern Financial Crises, 2016, pp 247-257 from Springer

Abstract: Abstract Experience shows that in every debt crisis, responsibility is shared between the debtor and the creditor. If responsibilities are shared, it is natural to think that when a crisis occurs, the solution should come from efforts shared by both parties in the contract. In the three cases analyzed in this book—the Argentine crisis, the American financial crisis, and the European economic malaise—a common feature has been a huge misjudgment by investors regarding the risks actually involved. However, important actors in the financial world have responsibility in this misjudgment. Therefore, a key issue for the future is how to protect investors from risk misjudgment. It is argued that regulation should restrict the type of products that financial institutions can offer to the public. Special attention should be placed on those risks capable of damaging the financial system as a whole. Moreover, the health of the banking system is also a critical issue in assessing the prospective of a country’s public debt, as the cases of Ireland, Iceland, and Spain show. Finally, a revision of economic research programs is encouraged. Economic illness rather than economic health should be the main object of economists’ efforts.

Keywords: IMF; Credit rating agencies; Financial regulation (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:spr:fimchp:978-3-319-20991-3_12

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DOI: 10.1007/978-3-319-20991-3_12

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