IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Finance and risk: does finance create risk?

  • Giancarlo Bertocco

    ()

    (Department of Economics, University of Insubria, Italy)

Rajan has earned a well-deserved reputation for having been one of the few to have hypothesized in a famous paper presented at the 2005 Jackson Hole conference that a disastrous financial crisis could have occurred. The key thesis put forward by Rajan was that the radical changes that had taken place over the previous decades rendered the economic system more fragile in that they induced the financial system to create a high amount of risk. The aim of this paper is to show: i) that Rajan’s thesis is not coherent with the mainstream theory according to which finance does not create risk; ii) that a meaningful theory capable of explaining the meaning of the elements used by Rajan to assert that finance creates risk can be elaborated on the basis of the lesson of Keynes and Schumpeter

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://eco.uninsubria.it/dipeco/Quaderni/files/QF2011_15.pdf
Download Restriction: no

Paper provided by Department of Economics, University of Insubria in its series Economics and Quantitative Methods with number qf1115.

as
in new window

Length: 30 pages
Date of creation: Dec 2011
Date of revision:
Handle: RePEc:ins:quaeco:qf1115
Contact details of provider: Postal: Via Ravasi 2-21100 Varese
Web page: http://www.uninsubria.it/uninsubria/facolta/econo.html
More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Bertocco Giancarlo, 2003. "The characteristics of a monetary economy: a Keynes-Schumpeter approach," Economics and Quantitative Methods qf0311, Department of Economics, University of Insubria.
  2. Laidler, David, 2010. "Lucas, Keynes, And The Crisis," Journal of the History of Economic Thought, Cambridge University Press, vol. 32(01), pages 39-62, March.
  3. James Crotty, 2008. "Structural Causes of the Global Financial Crisis: A Critical Assessment of the ‘New Financial Architecture’," UMASS Amherst Economics Working Papers 2008-14, University of Massachusetts Amherst, Department of Economics.
  4. Freeman, Richard B, 1993. "Labor Markets and Institutions in Economic Development," American Economic Review, American Economic Association, vol. 83(2), pages 403-08, May.
  5. James Crotty, 2011. "The Realism of Assumptions Does Matter: Why Keynes-Minsky Theory Must Replace Efficient Market Theory as the Guide to Financial Regulation Policy," UMASS Amherst Economics Working Papers 2011-05, University of Massachusetts Amherst, Department of Economics.
  6. Douglas W. Diamond & Raghuram G. Rajan, 2009. "The Credit Crisis: Conjectures about Causes and Remedies," American Economic Review, American Economic Association, vol. 99(2), pages 606-10, May.
  7. Paul Krugman, 2011. "The Profession and the Crisis," Eastern Economic Journal, Palgrave Macmillan, vol. 37(3), pages 307-312.
  8. Sachs Jeffrey D., 2009. "Rethinking Macroeconomics," Capitalism and Society, De Gruyter, vol. 4(3), pages 1-9, December.
  9. Philip Arestis & Ajit Singh, 2010. "Financial globalisation and crisis, institutional transformation and equity," Cambridge Journal of Economics, Oxford University Press, vol. 34(2), pages 225-238, March.
  10. Hyman P. Minsky, 1980. "Money, Financial Markets, and the Coherence of a Market Economy," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 3(1), pages 21-31, October.
  11. Axel Leijonhufvud, 2009. "Out of the corridor: Keynes and the crisis," Cambridge Journal of Economics, Oxford University Press, vol. 33(4), pages 741-757, July.
  12. Robert Skidelsky, 2011. "The relevance of Keynes," Cambridge Journal of Economics, Oxford University Press, vol. 35(1), pages 1-13.
  13. L. Randall Wray, 2009. "The rise and fall of money manager capitalism: a Minskian approach," Cambridge Journal of Economics, Oxford University Press, vol. 33(4), pages 807-828, July.
  14. David Colander, 2010. "The economics profession, the financial crisis, and method," Journal of Economic Methodology, Taylor & Francis Journals, vol. 17(4), pages 419-427.
  15. Raghuram G. Rajan, 2006. "Has Finance Made the World Riskier?," European Financial Management, European Financial Management Association, vol. 12(4), pages 499-533.
  16. Laidler, David, 2010. "Lucas, Keynes, And The Crisis - Erratum," Journal of the History of Economic Thought, Cambridge University Press, vol. 32(03), pages 443-443, September.
  17. Tony Lawson, 2009. "The current economic crisis: its nature and the course of academic economics," Cambridge Journal of Economics, Oxford University Press, vol. 33(4), pages 759-777, July.
  18. Smith, Vernon L & Suchanek, Gerry L & Williams, Arlington W, 1988. "Bubbles, Crashes, and Endogenous Expectations in Experimental Spot Asset Markets," Econometrica, Econometric Society, vol. 56(5), pages 1119-51, September.
  19. Jan Kregel, 2009. "Why don't the bailouts work? Design of a new financial system versus a return to normalcy," Cambridge Journal of Economics, Oxford University Press, vol. 33(4), pages 653-663, July.
  20. Rajan, Raghuram G. & Zingales, Luigi, 2003. "The great reversals: the politics of financial development in the twentieth century," Journal of Financial Economics, Elsevier, vol. 69(1), pages 5-50, July.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:ins:quaeco:qf1115. 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: (Segreteria Dipartimento)

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.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 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.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.