Where to From Here?: Lessons for Research, Policy and the Industry

Philipp Hartmann

Chapter 21 in The First Credit Market Turmoil of the 21st Century:Implications for Public Policy, 2009, pp 347-352 from World Scientific Publishing Co. Pte. Ltd.

Abstract: AbstractThe market turmoil that is ongoing while we are meeting here in Chicago has illustrated a fundamental problem in economic policy. There are two views on financial systems. In one view, financial systems are an indispensable engine of growth and development. They distribute savings and idle funds to productive real investments and consumption. By reallocating funds from less promising firms and industries to firms and industries with good growth prospects they contribute to the Schumpeterian process of “creative destruction”. In the other view, financial systems are inherently fragile. Stricken by maturity mismatches, asymmetric information, strong interconnectedness, leverage, and governance problems they are prone to recurrent crises often with severe adverse consequences for the real economy.

Keywords: Financial Crises; Systemic Risk; Credit Market Turmoil; International Financial Markets (search for similar items in EconPapers)
Date: 2009
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