39 Pages Posted: 9 Feb 2009 Last revised: 30 Jun 2009
Date Written: April 17, 2009
In 2008, the United States experienced a severe contraction in the availability of credit, a marked reduction in the price of common stocks, and an appreciable increase in interest rates on debt instruments issued by business entities and by state and local governments. The premise of the instant article is that, although this upheaval was economic in form and sudden in occurrence, it stemmed from change that was sociological in character and that started in prior decades. Specifically, the 2008 upheaval in finance is traced to a shift in social values among Americans - namely, an increased prevalence of hedonism and materialism in conjunction with an increased emphasis on short-term considerations - and to the suboptimum intellectual skills of the population that resulted from this shift. Quantitative evidence in support of the thesis is presented, and implications of the thesis for provisions of the Investment Company Act are discussed.
Keywords: investment companies, financial sector, credit crisis, sociology, social values, credit
JEL Classification: K2, K22, N20
Suggested Citation: Suggested Citation
Barnett, Larry D., The Financial Sector Upheaval of 2008: Sociological Antecedents and Their Implications for Investment Company Regulation (April 17, 2009). Widener Law School Legal Studies Research Paper No. 09-07; Hastings Business Law Journal, Vol 5, No. 2, p. 229. Available at SSRN: https://ssrn.com/abstract=1338925