Mauritius Financial System Stress Index: Estimating the Costs of the Subprime Crisis

2015 ◽  
Author(s):  
Indranarain Ramlall
Keyword(s):  
Financial System ◽  
Stress Index ◽  
Subprime Crisis

scholarly journals Understanding rating addiction: US courts and the origins of rating agencies' regulatory license (1900–1940)

2013 ◽  
Vol 20 (3) ◽  
pp. 237-257 ◽  
Author(s):  
Marc Flandreau ◽  
Joanna Kinga Sławatyniec
Keyword(s):  
Great Depression ◽  
Conflicts Of Interest ◽  
Financial System ◽  
Subprime Crisis ◽  
Rating Agencies ◽  
The Great Depression ◽  
The Us

This article challenges the ‘regulatory license’ view that reliance by regulators on the output of rating agencies in the 1930s ‘caused’ the agencies to become a central part of the fabric of the US financial system. We argue that long before the 1930s, courts began using ratings as financial-community-produced norms of prudence. This created ‘a legal license’ problem, very analogous to the ‘regulatory license’ problem, and gave rise to conflicts of interest not unlike those that have been discussed in the context of the subprime crisis. Rating agencies may have had substantial responsibility for the Great Depression of the 1930s.

Developing a Financial Stress Index for the Nigerian Financial System

2019 ◽  
Vol 14 (3) ◽  
pp. 135-157 ◽  
Author(s):  
Kehinde Damilola Ilesanmi ◽  
◽  
Devi Datt Tewari ◽  
Keyword(s):  
Financial System ◽  
Financial Stress ◽  
Stress Index ◽  
Financial Stress Index

scholarly journals An Asset-Based Framework of Credit Creation (applied to the Global Financial Crisis)

2017 ◽  
Vol 9 (2) ◽  
Author(s):  
Susanne von der Becke ◽  
Didier Sornette
Keyword(s):  
Financial Crisis ◽  
Global Financial Crisis ◽  
Financial System ◽  
Future Research ◽  
Significant Shift ◽  
Subprime Crisis ◽  
Fractional Reserve Banking ◽  
General Applicability ◽  
Credit Creation ◽  
The Global Financial Crisis

AbstractWe develop a conceptual asset-based framework of credit creation based on three leading variables: (i) the amount of assets acceptable as collateral, (ii) the level of leverage and (iii) the level of trust. As credit expands along these dimensions in a non-linear dynamic, the financial system becomes more liquid. At the same time, it becomes more prone to endogenous feedbacks and vulnerable to internally generated instabilities manifested as booms and busts. Applying this framework to the global financial crisis, we show that the subprime crisis was both a signature and only one possible trigger in an increasingly unstable financial system. Using historical data, we demonstrate a significant shift in the components of US bank balance sheets and a decoupling of bank assets from deposits since the mid-1980s, marking the rise of “securitized-fractional reserve banking”. The subsequent decades were a period of growing leverage, with debt-securities assuming money-like functions and serving as collateral for further credit creation. As trust began to recede, the high levels of leverage were no more viable, precipitating a reduction of the amount of assets acceptable as collateral, and leading to a contraction in credit and to liquidity spirals. We discuss the potential general applicability of this framework of credit creation and define extensions in future research.

Monoline Regulations to Control the Systemic Risk Created by Investment Banks and GSEs

2009 ◽  
Vol 9 (3) ◽  
Author(s):  
Dwight M. Jaffee
Keyword(s):  
Hedge Fund ◽  
Financial System ◽  
Regulatory Change ◽  
Subprime Crisis ◽  
Subprime Mortgage ◽  
Government Interventions ◽  
Risky Investment ◽  
Firm Bankruptcy ◽  
Financial Firm ◽  
Government Sponsored Enterprises

Abstract The paper offers a framework and a specific proposal for the re-regulation of key components of the U.S. financial system in the aftermath of the subprime mortgage crisis. It begins with a review of those aspects of the subprime crisis that required the large, observed government interventions, namely the feared bankruptcy of individual banks, insurers, and government sponsored enterprises with the potential to create a meltdown of the entire financial system. The paper then develops legislative responses that would make future systemic failures and bailouts of this magnitude highly unlikely. The paper's key analytic device is to distinguish two financial firm activities: (1) risky investment activities (“hedge fund" division) capable of causing firm bankruptcy, and (2) market-making and related activities (“infrastructure" division), the failure of which would have systemic implications. The goal of the proposed regulatory change is to ensure that the infrastructure division is bankruptcy remote and can operate on a stand-alone basis if necessary even when losses from the hedge fund division threaten the holding company's solvency.

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