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Regulatory Failure in the Subprime Crisis

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Notes

  1. The seminal model in Diamond and Dybvig (1983) and Diamond (1984) assumes that all debtor heterogeneity is unobservable.

  2. The theory of “information runs” is discussed by Jacklin and Bhattacharya (1988), which should be distinguished from the theory of “sunspot runs” of Diamond and Dybvig (1983).

  3. “Capture” theory, originally developed by Stigler (1970) and Posner (1974), predicts that regulators become the captives of the regulated instead of agents of the public good.

References

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  1. Hebrew University of Jerusalem, Jerusalem, Israel

    Michael Beenstock

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  1. Michael Beenstock
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Correspondence to Michael Beenstock.

Additional information

These remarks draw on Beenstock (2009).

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Beenstock, M. Regulatory Failure in the Subprime Crisis. Open Econ Rev 21, 147–150 (2010). https://doi.org/10.1007/s11079-009-9144-6

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