The Epistemology of the Financial Crisis: Complexity, Causation, Law, and Judgment

Lipshaw, Jeffrey M.

doi:10.2139/ssrn.1421837

Cited by 5 publications

(1 citation statement)

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“…Furthermore, it is because the inevitable gap between the superior complex products that investors desire and the exploitative complex products that are provided by financial institutions has actually triggered a multitude of market failures, such as impaired disclosures, moral hazards, service paralysis, and fraud (Schwarcz, ). This behavior also makes a global financial crisis inevitable (Brunnermeier & Oehmke, ; Lipshaw, ; Ghent, Torous, & Valkanov, ; Judge, ; Datz, ; Fahad & Laura, ). In response to this immense fragility and shock to the financial system that is caused by excessive complexity, adequately regulating financial complexity is undoubtedly the greatest challenge of modern financial markets.…”

Section: Introductionmentioning

confidence: 99%

How does investors' heterogeneous trust affect the complexity of financial products? A look into the development of online finance

Wang

Yang

2019

Manage Decis Econ

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We introduce "trusting effects" to market complexity strategy and, through modeling, measure the decision-making behavior of financial institutions' complexity choices as online and offline finance develops into different stages. We find that the complexity of financial products is not only determined by the intrinsic value and structure of products but also largely influenced by the behavior of investors. In addition, the characteristics of financial institutions, as well as different investor structures, also affect the complexity of the products and the equilibrium. Therefore, financial institutions attempt to exploit investors' biases and cognitive limitations through complexity strategies and ultimately obtain excess returns.

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Section: Introductionmentioning

confidence: 99%

How does investors' heterogeneous trust affect the complexity of financial products? A look into the development of online finance

Wang

Yang

2019

Manage Decis Econ

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Where Finance and Design Coincides: Designing Artefacts

Faust

2024

Weiterbildung Und Forschung Der SRH Fernhochschule – The Mobile University

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The Financial Crisis, Financial System Instability and Monetary Transmission Mechanism

Zwolankowski

2011

JOIS

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Abstract.The current financial crisis is also a crisis of cognition. Erroneous strategy of central banks and accommodative monetary policy (primarily of the Fed) have become causes of distortion of the information function of financial assets' prices. Excessive -in favourable monetary conditionsexpansion of the global financial system has increased the complexity (ergo non-transparency of information) of financial operations and investment strategies.

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The Epistemology of the Financial Crisis: Complexity, Causation, Law, and Judgment

Cited by 5 publications

References 10 publications

How does investors' heterogeneous trust affect the complexity of financial products? A look into the development of online finance

How does investors' heterogeneous trust affect the complexity of financial products? A look into the development of online finance

Where Finance and Design Coincides: Designing Artefacts

The Financial Crisis, Financial System Instability and Monetary Transmission Mechanism

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