Failing Institutions Are at the Core of the U.S. Financial Crisis
AbstractThis paper uses the structure of institutional economics to provide an explanation of the recent U.S. financial crisis. Institutional theory suggests that a county’s political, legal, social, and cultural institutions determine and characterize its economy. An institutional perspective of financial crises therefore incorporates unquantifiable aspects of the real world. Different institutions interacted to ignite and fuel the global crisis. A thorough understanding of all of the legal, political, and cultural institution that encompass a society, as well as their role in the market, is needed to explain and avoid the reoccurrences of financial crises.
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Bibliographic InfoPaper provided by Penn Institute for Economic Research, Department of Economics, University of Pennsylvania in its series PIER Working Paper Archive with number 12-040.
Length: 18 pages
Date of creation: 16 Oct 2012
Date of revision:
Institutional Economics; Financial Crisis; Law and Economics; Interdependence; Behavioral Economics; Behavioral Finance; Hume; Veblen; Coase;
Find related papers by JEL classification:
- G - Financial Economics
- O1 - Economic Development, Technological Change, and Growth - - Economic Development
- B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Institutional; Evolutionary
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-11-11 (All new papers)
- NEP-HME-2012-11-11 (Heterodox Microeconomics)
- NEP-PKE-2012-11-11 (Post Keynesian Economics)
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