Understanding Financial Crises (Clarendon Lectures in Finance) by Franklin Allen

by Franklin Allen

What causes a financial crisis? Can financial crises be anticipated or even avoided? What can be done to lessen their impact? Should governments and international institutions intervene? Or should financial crises be left to run their course? In the aftermath of the recent Asian financialcrisis, many blamed international institutions, corruption, governments, and flawed macro and microeconomic policies not only for causing the crisis but also unnecessarily lengthening and deepening it.Based on ten years of research, the authors develop a theoretical approach to analyzing financial crises. Beginning with a review of the history of financial crises and providing readers with the basic economic tools needed to understand the literature, the authors construct a series of increasinglysophisticated models. Throughout, the authors guide the reader through the existing theoretical and empirical literature while also building on their own theoretical approach. The text presents the modern theory of intermediation, introduces asset markets and the causes of asset price volatility,and discusses the interaction of banks and markets. The book also deals with more specialized topics, including optimal financial regulation, bubbles, and financial contagion.

Genres: Economics, Finance

Paperback

First published March 22, 2007

Reviews

[Richard Marney · Rating 4 out of 5]

This is a book requiring an advanced undergraduate / graduate level knowledge of economics. The authors present a rigorous, micrcofoundations-based approach to address a number of topics essential to understand financial crises causes, their effects, and requisite policy focus. Readers should be prepared to take their time in digesting the material. They will not be disappointed.

[Foppe · Rating 1 out of 5]

Book that promises everything and delivers nothing. After you've finished it you're just as confused about what causes them as before you've started.. The idea being, presumably, that economics is really mysterious and should therefore be explained badly, with every event only being analyzed after it's been stripped of its context (==stuff of which they don't understand how to model it and which is therefore ignored entirely). Ignoring reality except insofar as you can model it (using neat little models of singular interactions between 2 actors) is not doing science, however.

[Ali]

You need to know how financial crises are formed and how to stop them.