The Causes of the Financial Crisis and the Impact of Raising Capital Requirements

Martin Neil Baily and Douglas J. Elliott
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Martin Neil Baily: Brookings Institution, USA
Douglas J. Elliott: Brookings Institution, USA

Chapter 6 in The International Financial Crisis:Have the Rules of Finance Changed?, 2011, pp 59-71 from World Scientific Publishing Co. Pte. Ltd.

Abstract: AbstractThe following sections are included:IntroductionThe Causes of the CrisisHome prices were expected to keep risingLong and short interest rates were lowHousing demand built on itself to create a bubble in pricesShifting types of lending and the erosion of standardsEconomic incentives in the housing and mortgage origination marketsSecuritization and the funding of the housing boomMore securitization and more leverage — CDOsStructured investment vehicles and off-balance-sheet entitiesLeverage and the push to short-term borrowingCredit insurance and the growth in credit default swapsThe failure of company risk management practicesRegulation and supervisionWhat Is the Impact of Increasing Capital Requirements?ConclusionsReferences

Keywords: Financial Crisis; Financial Regulation; International Banking; Financial Regulatory Reform (search for similar items in EconPapers)
Date: 2011
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