A Radical Proposal for Reforming the Banking System

Janson, Nathalie

doi:10.2139/ssrn.1773917

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2015

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“…We know though that the prudential rules come into contradiction with the insurance mechanisms put into place by the central banks. Fixing a minimum level of own funds without asking what that means in terms of risk leads to the making of an arbitrary decision (Janson 2011). Faced with this arbitrary the banks try to go around the regulations and are encouraged by a system favorable to risk taking.…”

Section: Discussionmentioning

confidence: 99%

Financial Fragility and Central Bank: Are Minsky's Crisis and Austrian Business Cycle are Complementary?

Facchini¹

2015

J. Rev. Global Econ.

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This article explains why Minsky's post-keynesian explanation tells only one side of the crisis' story. Indeed, the financial fragility of markets explains mainly the activity of Central bank i.e. the lender of last resort which increases the moral hazard phenomena and the socialization of risks. The regulated capitalism is, in this perspective, the cause of market instability and financial fragility. Indeed, moral hazard encourages commercial banks to take risks. In that respect, the economic policies implemented to manage the crisis of 2008 are inadequate.

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Section: Discussionmentioning

confidence: 99%

Financial Fragility and Central Bank: Are Minsky's Crisis and Austrian Business Cycle are Complementary?

Facchini¹

2015

J. Rev. Global Econ.

View full text Add to dashboard Cite

show abstract

A Radical Proposal for Reforming the Banking System

Cited by 1 publication

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Financial Fragility and Central Bank: Are Minsky's Crisis and Austrian Business Cycle are Complementary?

Financial Fragility and Central Bank: Are Minsky's Crisis and Austrian Business Cycle are Complementary?

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