The Great Financial Crisis and Its Main Determinants
This chapter focuses on the most influential interpretations of the Great Financial Crisis. The author discusses first the main structural financial factors focusing on the exponential growth of securitisation, the adoption of a new model of banking based on it, and the contemporaneous expansion of shadow banking. These structural transformations contributed to increase systemic risk favouring the progressive hypertrophy of speculation. The author extends the critical appraisal to the main structural factors in the real economy, discussing the role played by global real imbalances, the deterioration of income and wealth distribution, and the decline of Corporate Social Responsibility standards. Finally, the author introduces a brief discussion of the shortcomings of central banks as far as the monetary policy is concerned. Each of these explanations captures something that played a significant role in the crisis. However, the author argues that the usual versions of these explanations are often shallow and misleading contributing to explain why the regulatory response to the crisis has been ineffective.
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