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Failing Institutions Are at the Core of the U.S. Financial Crisis

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  • Yochanan Shachmurove

    (Department of Economics and Business, The City College of The City University of New York,and Department of Economics, The University of Pennsylvania)

Abstract

This 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.

Suggested Citation

  • Yochanan Shachmurove, 2012. "Failing Institutions Are at the Core of the U.S. Financial Crisis," PIER Working Paper Archive 12-040, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    • Handle: RePEc:pen:papers:12-040
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    References listed on IDEAS

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    More about this item

    Keywords

    Institutional Economics; Financial Crisis; Law and Economics; Interdependence; Behavioral Economics; Behavioral Finance; Hume; Veblen; Coase;
    All these keywords.

    JEL classification:

    • G - Financial Economics
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary; Modern Monetary Theory;

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