The financial sector and the future of capitalism
AbstractFinancial sector innovation and development since the 1970s contributed to global prosperity, but increased the probability of bank failures. The post-2007 financial crisis was one of many crises with idiosyncratic catalysts but common underlying causes. Public policies, such as deposit insurance, with moral hazard implications increased the likelihood of crises, and cheap money exacerbated the situation by encouraging highly leveraged investments. The policy challenge is to address moral hazard without repressing the financial sector. This is not the end of capitalism, but a reminder of the difficulty in policing the financial sector which is at the heart of capitalist economies.
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Bibliographic InfoArticle provided by Elsevier in its journal Economic Systems.
Volume (Year): 34 (2010)
Issue (Month): 1 (March)
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Financial development Moral hazard;
Other versions of this item:
- G0 - Financial Economics - - General
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
- G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
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