First Credit Market Turmoil of the 21st Century: Implications for Public Policy

First Credit Market Turmoil of the 21st Century: Implications for Public Policy

by Douglas D. Evanoff
     
 

Since the summer of 2007, credit markets in almost all industrial countries have been in substantial turmoil and this has become the focus of intense policy debates. The papers in this volume are contributed by the world's leading financial experts and constitute a thorough examination of the first credit market turmoil of the 21st Century. They provide an overview

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Overview

Since the summer of 2007, credit markets in almost all industrial countries have been in substantial turmoil and this has become the focus of intense policy debates. The papers in this volume are contributed by the world's leading financial experts and constitute a thorough examination of the first credit market turmoil of the 21st Century. They provide an overview of the main causes, transmission mechanisms and economic implications of what by now has become a major systemic financial crisis. They assess the most important policy considerations and conclude about how to stabilize financial systems, attenuate repercussions on the real economy and shape future regulatory structures. The analyses, conclusions, and recommendations can be expected to influence both public and private policies to mitigate, if not prevent, such crises in the future.

Product Details

ISBN-13:
9789814280471
Publisher:
World Scientific Publishing Company, Incorporated
Publication date:
11/04/2009
Pages:
404
Product dimensions:
6.10(w) x 8.90(h) x 1.10(d)

Table of Contents

Preface ix

Acknowledgements xi

I Special Addresses 1

Central Banks and the Financial Turmoil José Manuel González-Páramo 3

The Implications of the Credit Crisis for Public Policy Charles H. Dallara 11

Where Are Our Leaders? Kenneth W. Dam 23

Trust and Financial Markets Paola Sapienza 29

II What Happened, Where? 39

A View of the U.S. Subprime Crisis Robert DiClemente, Citigroup Kermit Schoenholtz 41

What Has Happened in Europe? Monetary Policy, Lending Cycles, Banking Competition, Risk-Taking, and Regulation Jesus Saurina 67

The Subprime Crisis Effects in the Rest of the World Laura E. Kodres 87

III How Serious is the Damage? 101

Bank Failures: The Limitations of Risk Modeling Patrick Honohan 103

Comments: How Serious is the Damage? Christopher Kent 125

IV Why did It Go Undetected/Underestimated for So Long? 139

Cliff Risk and the Credit Crisis Joseph R. Mason 141

The Credit Crunch of 2007: What Went Wrong? Why? What Lessons Can be Learned? John C. Hull 161

Overdependence on Credit Ratings was a Primary Cause of the Crisis Frank Partnoy 175

V Experience with Crisis Management 193

Liquidity Management Under Market Turmoil: Experience of the European Central Bank in the First Year of the 2007-2008 Financial Market Crisis Nuno Cassola Cornelia Holthausen Flemming Wiirtz 195

Crisis Management and Financial Stability: Some Lessons from the United Kingdom Nigel Jenkinson 229

VI Implications for Basel II and Bank Capital Regulation 239

Risk Management Failures During the Financial Crisis Michel Crouhy 241

A Supervisor's View of the Current Financial Turmoil Cathy Lemieux Steven VanBever 267

The SubprimeCrisis: Lessons About Market Discipline Mark J. Flannery 281

Comments: Implications for Bank Capital Standards/Regulation Robert E. Litan 305

VII Implications for Regulation of Financial Markets and Instruments 309

Implications of the Crisis for Regulation Mark Carey 311

The Seven Deadly Frictions of Subprime Mortgage Credit Securitization Adam B. Ashcraft Til Schuermann 325

VIII Policy Panel: Where to From Here? 345

Where to From Here?: Lessons for Research, Policy and the Industry Philipp Hartmann 347

Tarp Version 1: A Turning Point in Crisis Management Richard J. Herring 353

Financial Crises: Seeing Patterns, Limiting Risks Henry Kaufman 367

Addressing the Credit Market Turmoil of 2007-08 Sam Peltzman 371

Where to From Here? Lawrence R. Uhlick 377

Conference Agenda 383

Index 389

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