IDEAS home Printed from https://ideas.repec.org/a/bca/bcarev/v2010-2011y2011iwinter10-11p11-19.html
   My bibliography  Save this article

Adverse Selection and Financial Crises

Author

Listed:

Abstract

The recent financial crisis has highlighted the importance of adverse selection as a contributing factor to financial market instability. In this article, the author examines the phenomenon of adverse selection and explains how its presence in a particular market can lead to market freezes and liquidity hoarding. She also describes several mechanisms that can propagate the initially small effect of adverse selection to the entire financial system. Possible policy responses and their effectiveness are also discussed.

Suggested Citation

  • Koralai Kirabaeva, 2011. "Adverse Selection and Financial Crises," Bank of Canada Review, Bank of Canada, vol. 2010(Winter), pages 11-19.
  • Handle: RePEc:bca:bcarev:v:2010-2011:y:2011:i:winter10-11:p:11-19
    as

    Download full text from publisher

    File URL: http://www.bankofcanada.ca/wp-content/uploads/2011/02/kirabaeva.pdf
    File Function: full text
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kooths, Stefan & van Roye, Björn, 2012. "Nationale Geldschöpfung im Euroraum: Mechanismen, Defekte, Therapie," Kiel Discussion Papers 508/509, Kiel Institute for the World Economy (IfW).
    2. Kooths, Stefan & van Roye, Björn, 2012. "Euro area: Single currency - national money creation," Kiel Working Papers 1787, Kiel Institute for the World Economy (IfW).
    3. Sokolovskyi, Dmytro & Sokolovska, Olena, 2013. "The problem of arising the Pareto inefficient norm in relations “investor – government” type," MPRA Paper 44745, University Library of Munich, Germany.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bca:bcarev:v:2010-2011:y:2011:i:winter10-11:p:11-19. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: http://www.bank-banque-canada.ca/ .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.