Financial Crises
Gary Gorton ()
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Gary Gorton: Yale School of Management, Yale University, New Haven, Connecticut 06520, USA
Annual Review of Financial Economics, 2018, vol. 10, issue 1, 43-58
Abstract:
Financial crises are runs on short-term debt. Whatever its form, short-term debt is an inherent feature of a market economy. A run is an information event in which holders of short-term debt no longer want to lend to banks because they receive information leading them to suspect the value of the backing for the debt, so they run. When runs are system-wide they threaten the solvency of the entire financial system, which then requires either public or private intervention to remedy. Runs, which most likely follow credit booms, are integral parts of movements in the macroeconomy.
Keywords: financial crises; bank runs; financial intermediation (search for similar items in EconPapers)
JEL-codes: E3 E5 E6 (search for similar items in EconPapers)
Date: 2018
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