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The U.S. and Irish Credit Crises: Their Distinctive Differences and Common Features

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  • Gregory Connor

    (Economics,Finance and Accounting, National University of Ireland, Maynooth)

  • Thomas Flavin

    (Economics,Finance and Accounting, National University of Ireland,Maynooth)

  • Brian O’Kelly

    (Dublin City University)

Abstract

Although the US credit crisis precipitated it, the Irish credit crisis is an identifiably separate one, which might have occurred in the absence of the U.S. crash. The distinctive differences between them are notable. Almost all the apparent causal factors of the U.S. crisis are missing in the Irish case; and the same applies vice-versa. At a deeper level, we identify four common features of the two credit crises: capital bonanzas, irrational exuberance, regulatory imprudence, and moral hazard. The particular manifestations of these four “deep” common features are quite different in the two cases.

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  • Gregory Connor & Thomas Flavin & Brian O’Kelly, 2010. "The U.S. and Irish Credit Crises: Their Distinctive Differences and Common Features," Economics Department Working Paper Series n206-10.pdf, Department of Economics, National University of Ireland - Maynooth.
    • Handle: RePEc:may:mayecw:n206-10.pdf
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    2. David M. Kemme & Saktinil Roy, 2012. "Did the Recent Housing Boom Signal the Global Financial Crisis?," Southern Economic Journal, John Wiley & Sons, vol. 78(3), pages 999-1018, January.
    3. Lane, Philip, 2015. "The Funding of the Irish Domestic Banking System During the Boom," CEPR Discussion Papers 10777, C.E.P.R. Discussion Papers.
    4. Ahuja, Rishi & Barrett, Sean & Corbet, Shaen & Larkin, Charles, 2019. "A way forward: The future of Irish and European union financial regulation," Economic Analysis and Policy, Elsevier, vol. 64(C), pages 346-360.
    5. David M. Kemme & Saktinil Roy, 2012. "Did the Recent Housing Boom Signal the Global Financial Crisis?," Southern Economic Journal, Southern Economic Association, vol. 78(3), pages 999-1018, January.
    6. Sebastian Dullien & Barbara Fritz & Laurissa Mühlich, 2013. "Regional Monetary Cooperation: Lessons from the Euro Crisis for Developing Areas?," World Economic Review, World Economics Association, vol. 2013(2), pages 1-1, February.
    7. Dungey, Mardi & Flavin, Thomas J. & Lagoa-Varela, Dolores, 2020. "Are banking shocks contagious? Evidence from the eurozone," Journal of Banking & Finance, Elsevier, vol. 112(C).
    8. Bengui, Julien & Phan, Toan, 2018. "Asset pledgeability and endogenously leveraged bubbles," Journal of Economic Theory, Elsevier, vol. 177(C), pages 280-314.
    9. T. Flavin & M.Dongey & L. Sheenan, 2020. "Banks and Sovereigns: Did adversity bring them closer?," Economics Department Working Paper Series n307-20.pdf, Department of Economics, National University of Ireland - Maynooth.
    10. Michael Wosser, 2015. "Long Run Macroeconomic and Sectoral Determinants of Systemic Banking Crises," Economics Department Working Paper Series n266-15.pdf, Department of Economics, National University of Ireland - Maynooth.
    11. Rakesh Padhan & K. P. Prabheesh, 2019. "Effectiveness Of Early Warning Models: A Critical Review And New Agenda For Future Direction," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 22(4), pages 457-484.
    12. David M. Kemme & Saktinil Roy, 2012. "Did the Recent Housing Boom Signal the Global Financial Crisis?," Southern Economic Journal, John Wiley & Sons, vol. 78(3), pages 999-1018, January.
    13. Connor, Gregory & Flavin, Thomas, 2015. "Strategic, unaffordability and dual-trigger default in the Irish mortgage market," Journal of Housing Economics, Elsevier, vol. 28(C), pages 59-75.
    14. Stanley Fischer, 2017. "Housing and Financial Stability : a speech at the DNB-Riksbank Macroprudential Conference Series, Amsterdam, Netherlands, June 20, 2017," Speech 956, Board of Governors of the Federal Reserve System (U.S.).
    15. Jihad Dagher, 2018. "Regulatory Cycles: Revisiting the Political Economy of Financial Crises," IMF Working Papers 2018/008, International Monetary Fund.
    16. Robert N McCauley, 2018. "The 2008 crisis: transpacific or transatlantic?," BIS Quarterly Review, Bank for International Settlements, December.
    17. Flavin, Thomas J. & Lagoa-Varela, Dolores, 2021. "On the stability of stock-bond comovements across market conditions in the Eurozone periphery," Global Finance Journal, Elsevier, vol. 49(C).
    18. Kauko, Karlo, 2014. "How to foresee banking crises? A survey of the empirical literature," Economic Systems, Elsevier, vol. 38(3), pages 289-308.
    19. Smith, Constance E., 2011. "External balance adjustment: An intra-national and international comparison," Journal of International Money and Finance, Elsevier, vol. 30(6), pages 1195-1213, October.
    20. Gregory Connor & Brian O'Kelly, 2010. "Sliding Doors Cost Measurement.A Restrictive Approach to Analyzing the Net Economic Cost of Policy Decisions and an Application to Irish Financial Regulation," Economics Department Working Paper Series n214a-10.pdf, Department of Economics, National University of Ireland - Maynooth.
    21. Krzysztof Olszewski, 2013. "The Commercial Real Estate Market, Central Bank Monitoring and Macroprudential Policy," Review of Economic Analysis, Digital Initiatives at the University of Waterloo Library, vol. 5(2), pages 213-250, December.
    22. Seán Ó Riain, 2012. "The Crisis of Financialisation in Ireland," The Economic and Social Review, Economic and Social Studies, vol. 43(4), pages 497-533.
    23. Dwyer, Gerald P. & Lothian, James R., 2012. "International and historical dimensions of the financial crisis of 2007 and 2008," Journal of International Money and Finance, Elsevier, vol. 31(1), pages 1-9.
    24. Michael O’Grady, 2019. "Estimating the Output, Inflation and Unemployment Gaps in Ireland using Bayesian Model Averaging," The Economic and Social Review, Economic and Social Studies, vol. 50(1), pages 35-76.
    25. Gregory Connor & Thomas Flavin & Brian O'Kelly, 2015. "Restructuring and Recovery of the Irish Financial Sector: An Economic Case History V2," Economics Department Working Paper Series n259-15.pdf, Department of Economics, National University of Ireland - Maynooth.

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