A Model for the Intervention of a Financial Crisis
Global Journal of Business Research, Vol. 6, No. 2, pp. 41-48, 2012
8 Pages Posted: 6 Jan 2012
Date Written: 2011
This paper builds a model for intervention and/or mitigation of a financial crisis by first identifying those conditions precedent to a systemic based financial crisis, and then outlying a process to integrate firm specific and systematic risk into a comprehensive strategic model. A simple application of the model was able to identify significant outliers. For example, using 2006 to 2010 data, Capital One Financial Corporation was identified for intervention from as early as 2006. This corporation received $3.56 billion of the Emergency Economic Stabilization Act Federal bailout funds.
Keywords: systematic risk, financial crisis, banking, reform, failure, regulation, capital, government policy and regulation
JEL Classification: G01, G28
Suggested Citation: Suggested Citation