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Who Listened? Unappreciated Teachings of New Institutional Economics Related to the Financial Crisis of 2008

Author

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  • Rudolf Richter

    (Universität des Saarlandes, Wirtschaftswissen- schaften, Wirtschaftstheorie, Postfach 15 11 50, D-66041 Saarbrücken)

Abstract

Who was listening before the Financial Crisis of 2008 to Arrow’s warnings and the teachings of Coase? Due to transaction costs, incomplete foresight and bounded rationality not all risks that would be desirable to shift can be shifted through the market. Financial firms and other institutions take on part of the burden. To expand the frontier of risk trading requires institutional answers – in particular new forms of credible commitments. Improvements in information technology alone do not do the trick.

Suggested Citation

  • Rudolf Richter, 2009. "Who Listened? Unappreciated Teachings of New Institutional Economics Related to the Financial Crisis of 2008," Credit and Capital Markets, Credit and Capital Markets, vol. 42(4), pages 473-486.
  • Handle: RePEc:kuk:journl:v:42:y:2009:i:4:p:473-486
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    References listed on IDEAS

    as
    1. Martin Hellwig, 2008. "Systemic Risk in the Financial Sector: An Analysis of the Subprime-Mortgage Financial Crisis," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2008_43, Max Planck Institute for Research on Collective Goods.
    2. Hellwig, Martin, 1997. "Unternehmensfinanzierung, Unternehmenskontrolle und Ressourcenallokation: Was leistet das Finanzsystem?," Sonderforschungsbereich 504 Publications 97-02, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
    3. Martin Hellwig, 2009. "Systemic Risk in the Financial Sector: An Analysis of the Subprime-Mortgage Financial Crisis," De Economist, Springer, pages 129-207.
    4. Barry Eichengreen, 2009. "From the Asian crisis to the global credit crisis: reforming the international financial architecture redux," International Economics and Economic Policy, Springer, pages 1-22.
    Full references (including those not matched with items on IDEAS)

    More about this item

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G29 - Financial Economics - - Financial Institutions and Services - - - Other

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