Abstract
Systemic risk and sentiment are core concepts of the FIH. A financial firm is systemically risky when it is too big to fail in a financial crisis, and as a result contingency socialism comes into play as it is rescued by government action. According to the FIH, the route to contingency socialism features the occurrence of euphoria during an economic expansion. Euphoria is the leading edge of sentiment. This chapter discusses empirical aspects of analyzing the coevolution of systemic risk and sentiment over time.
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© 2016 Hersh Shefrin
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Shefrin, H. (2016). Behavioral Dimension of Systemic Risk. In: Behavioral Risk Management. Palgrave Macmillan, New York. https://doi.org/10.1057/9781137445629_12
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DOI: https://doi.org/10.1057/9781137445629_12
Publisher Name: Palgrave Macmillan, New York
Print ISBN: 978-1-349-55420-1
Online ISBN: 978-1-137-44562-9
eBook Packages: Economics and FinanceEconomics and Finance (R0)