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Financial Crises and Their Responses in the Institutional Reforms: Glass-Steagall Act versus Dodd-Frank Act
[Finanční krize a jejich odezvy v institucionálních reformách: Glass-Steagall Act versus Dodd-Frank Act]

Author

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  • Petr Musílek

Abstract

Financial crisis is a sharp, brief, ultracyclical deterioration of all or most of a group of financial indicators - illiquidity, financial insolvencies, rate of returns, asset prices, financial institutions failures, and rush out of the real or long-term financial asset into money. Financial crisis solution has two dimensions. The crisis is connected with goverment interventions to stop systematic collapse of the whole financial system. After realization of the bail-out phase, instantly starts second phase, focuses on restoring the public confidence in the financial system includes discussion and practical implementation the institutional response to the financial crisis. This paper surveys the institutional response to the Great Depression, the Great Moderation and the Global Financial Crisis. We can identify these as follows: Glass- Steagall Act, Gramm-Leach-Bliley Act and Dodd-Frank Act. There are many variants of the institutional responses to the development in economical and financial environment. Financial and Law theory indicates a wide variety of institutional responses, suggesting that is no universal ideal approach. But one aspect is clear, that Dodd-Frank Act is noGlass-Steagall Act.

Suggested Citation

  • Petr Musílek, 2010. "Financial Crises and Their Responses in the Institutional Reforms: Glass-Steagall Act versus Dodd-Frank Act [Finanční krize a jejich odezvy v institucionálních reformách: Glass-Steagall Act versus Dodd-Frank Act]," Český finanční a účetní časopis, Prague University of Economics and Business, vol. 2010(2), pages 6-17.
    • Handle: RePEc:prg:jnlcfu:v:2010:y:2010:i:2:id:63:p:6-17
    DOI: 10.18267/j.cfuc.63
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    References listed on IDEAS

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    1. Mr. Luc Laeven & Mr. Fabian Valencia, 2010. "Resolution of Banking Crises: The Good, the Bad, and the Ugly," IMF Working Papers 2010/146, International Monetary Fund.
    2. White, Eugene Nelson, 1986. "Before the Glass-Steagall Act: An analysis of the investment banking activities of national banks," Explorations in Economic History, Elsevier, vol. 23(1), pages 33-55, January.
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    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)

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