The 2007 Meltdown in Structured Securitization: Searching for Lessons, not Scapegoats

Gerard Caprio, Asli Demirguc-Kunt and Edward Kane

The World Bank Research Observer, 2010, vol. 25, issue 1, 125-155

Abstract: The intensity of the crisis in financial markets has surprised nearly everyone. The authors search out the root causes of the crisis, distinguishing them from scapegoating explanations that have been used in policy circles to divert attention from the underlying breakdown of incentives. Incentive conflicts explain how securitization went wrong, why credit ratings proved so inaccurate, and why it is superficial to blame the crisis on mark-to-market accounting, an unexpected loss of liquidity, trends in globalization, and deregulation in financial markets. The authors' analysis finds disturbing implications of the crisis for Basel II and its implementation. They conclude by drawing out lessons for developing countries and identifying reforms that would improve incentives by increasing transparency and accountability in government and industry alike. Copyright 2010, Oxford University Press.

Date: 2010
References: Add references at CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
http://hdl.handle.net/10.1093/wbro/lkp029 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: The 2007 meltdown in structured securitization: searching for lessons, not scapegoats (2008)
Working Paper: The 2007 Meltdown in Structured Securitization: Searching for Lessons not Scapegoats (2008)
Working Paper: The 2007 Meltdown in Structured Securitization: Searching for Lessons not Scapegoats (2008)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:wbrobs:v:25:y:2010:i:1:p:125-155

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

The World Bank Research Observer is currently edited by Peter Lanjouw

More articles in The World Bank Research Observer from World Bank Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK. Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press ().