Inequality-Led Financial Instability

Mapping fragility – Functions of wealth and social classes in U.S. household finance

“…Those include the deregulation of interest rates and other financial charges, the creation of new credit products to extract equity, the increase of loan-to-values ratios, that is the lowering of required down payments on purchases, as well as availability of better information on the quality of the borrowers. Authors, more or less convincingly, recall the influence of new aggressive marketing strategies and credit instruments, predatory and even criminal behavior (Black et al 1995, Wray 2008, Dymski 2009, Mian and Sufi 2009, Kaboub et al 2010, Keys et al 2010Herndon 2017. In a controversial book, Rajan (2010, 39) suggested that the government "cynically" pushed easy credit, deregulation and an aggressive housing policy, to temporarily please an impoverished middle class.…”

Una revisión comparativa del papel de la desigualdad de ingresos en las teorías de la crisis económica y su contribución a la crisis financiera de 2007-2009

“…Economists who discuss the subprime crisis in the light of Minskian instability only mention inequality in passing, if at all. Two notable exceptions are Dymski (2010) and Kaboub et al (2010). Kaboub et al argue that "a major contributing factor to the conditions leading to aggressive subprime lending behavior is the build-up and persistence of economic inequality that has intensified since 1980" (p. 9), while Dymski stresses that an important institutional feature of the subprime crisis was that banks increasingly targeted low income minorities who had previously been excluded from financial markets.…”