Financial Institution, Asset Bubbles and Economic Performance
AbstractThis paper explores the relation between the quality of financial institution and asset bubbles. In this paper, we will show that bubbles can improve the macro performance even if the quality of financial in- stitution is very poor and the financial market does not work well. In this sense, the high quality of financial institution and bubbles are substitutes. We will explore, however, that they are not perfect substi- tutes. Bubbles may burst. If bubbles burst, the economic performance must go down if the quality of financial institution is low. Hence, we will show that not relaying on bubbles, but improving the quality of financial institution is important for long run macro performance.
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Bibliographic InfoPaper provided by Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo in its series CARF F-Series with number CARF-F-234.
Length: 28 pages
Date of creation: Oct 2010
Date of revision:
Other versions of this item:
- Tomohiro Hirano & Noriyuki Yanagawa, 2010. "Financial Institution, Asset Bubbles and Economic Performance," CIRJE F-Series CIRJE-F-767, CIRJE, Faculty of Economics, University of Tokyo.
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