IDEAS home Printed from https://ideas.repec.org/h/pal/palchp/978-0-230-11736-5_2.html
   My bibliography  Save this book chapter

Too Much Right Can Make a Wrong: Setting the Stage for the US Financial Crisis

In: Financial Institutions and Markets

Author

Listed:
  • Richard J. Rosen

    (Federal Reserve Bank of Chicago)

Abstract

The financial crisis that started in 2007 exposed a number of flaws in the financial system. Many of these flaws were associated with financial instruments that were issued by the shadow banking system, especially securitized assets. The volume and complexity of securitized assets grew rapidly during the run-up to the financial crisis that began in 2007. This chapter discusses how the financial crisis can be viewed as a possible but logical outcome of a system where investors are overconfident, busy, and investing other peoples’ money and intermediaries are set up to take advantage of investors’ tendencies. The investor-intermediary risk cycle in this crisis is common to other crises. However, there are a number of factors that may have made the 2007 crisis more severe. Among them are the length of the precrisis period, the shift from financial intermediaries to the shadow banking system, the increasing interconnectedness among financial firms, and the increased leverage at some financial firms.

Suggested Citation

  • Richard J. Rosen, 2010. "Too Much Right Can Make a Wrong: Setting the Stage for the US Financial Crisis," Palgrave Macmillan Books, in: Robert R. Bliss & George G. Kaufman (ed.), Financial Institutions and Markets, chapter 2, pages 37-69, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-0-230-11736-5_2
    DOI: 10.1057/9780230117365_2
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Citations

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


    Cited by:

    1. Si, Deng-Kui & Li, Xiao-Lin, 2022. "Shadow banking business and firm risk-taking: Evidence from China," Research in International Business and Finance, Elsevier, vol. 62(C).
    2. Marina Khmelnitskaya, 2014. "Russian housing finance policy: state-led institutional evolution," Post-Communist Economies, Taylor & Francis Journals, vol. 26(2), pages 149-175, June.

    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:pal:palchp:978-0-230-11736-5_2. See general information about how to correct material in RePEc.

    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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.palgrave.com .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.