Conclusions and Our Financial Future

Hossein Askari () and Abbas Mirakhor
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Abbas Mirakhor: International Centre for Education in Islamic Finance (INCEIF)

Chapter 5 in The Next Financial Crisis and How to Save Capitalism, 2015, pp 63-72 from Palgrave Macmillan

Abstract: Abstract The financialization of the economy has brought a number of interrelated problems: financial crises that have led to severe economic downturns with high unemployment, declining economic opportunities, stagnant real wages, and reduced economic growth and thus growing income and wealth inequality. It is time to make a bold change by putting our financial house in order and on a better path. Higher capital requirements for banks, better regulations, supervision and enforcement, and the like are invariably helpful, but at best they will only delay the inevitable, another devastating financial crisis. The prevalence of debt financing is at the heart of the problem. We need more fundamental reform of our financial system that reduces the supremacy of debt, encourages risk-sharing finance, and increases the fraction of reserves in fractional reserve banking.

Keywords: economic growth; income and wealth inequality; reforms; regulations; return to capital (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-137-54437-7_5

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DOI: 10.1057/9781137544377_5

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