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The Roots of the Financial Collapse: Going Way, Way Back

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  • Harold Petersen

    () (Boston College)

Abstract

The paper is based on a talk given in April 2010. It traces the roots of the recent financial crisis from development of the limited liability corporation, to separation of ownership from control, tax incentives for debt financing, investment bankers moving to the corporate form, government backstopping the lenders, and the failure of the quants. Finally, it considers the Minsky hypothesis, under which financial markets are inherently unstable.

Suggested Citation

  • Harold Petersen, 2010. "The Roots of the Financial Collapse: Going Way, Way Back," Boston College Working Papers in Economics 760, Boston College Department of Economics.
  • Handle: RePEc:boc:bocoec:760
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    File URL: http://fmwww.bc.edu/EC-P/wp760.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    financial crises; limited liability; leverage; incentives; investment banking; corporate taxation; quants; Minsky hypothesis.;

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

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