Shall We Keep Early Diers Alive?

Andrea Pinna

Working Paper CRENoS from Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia

Abstract: Most extant explanations of financial crises emphasise the role played by negative shocks on the liability side of a bank's balance sheet. The vast literature on bank runs induced policy makers to build up a reputation as institutions willing to do anything to support the orderly fulfillment of depositors' and interbank claims. Nonetheless, the LTCM crisis of 1998 and the Subprime crisis of 2007 are compelling examples of how the banking industry is prone to systemic disruptions even without preference shocks or domino effect. This survey argues in favour of the still marginal literature on financial crises unfolding through the asset side of banks' balance sheets.

Keywords: Shadow banking; Originate to distribute; financial crises; Diabolic loop (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-cfn and nep-his
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Persistent link: https://EconPapers.repec.org/RePEc:cns:cnscwp:201411

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