Credit Crises: The Role of Excess Capital

Credit crises are catastrophic events in which banks and lenders suffer extreme losses when loans and other credit instruments default on a large scale and cause banks to fail in extraordinary numbers. Massive loss of economic value ensues, threatening the viability of national economies and the global financial system.
The most recent credit crises, the 2007 Subprime Mortgage Crisis and 2007-2009 Great Recession, have striking parallels to the Roaring Twenties and the Great Depression. In b...