Leverage, Systemic Risk and Financial System Health: How Do We Develop a Healthy Financial System?
Anjan V. Thakor
Washington University, Saint Louis - John M. Olin School of Business; European Corporate Governance Institute (ECGI)
January 12, 2014
Financial System, Markets and Institutional Changes ( eds: Ted Linblom, Stefan Sjogren, and Magnus Willesson), Palgrave McMillan, Forthcoming
This paper briefly discusses the causes of the 2007-09 financial crisis and the extent to which the systemic risk that buffeted this crisis was linked to excessive leverage. It then focuses on what is needed for a healthy financial system that has a relatively low probability of a systemic financial crisis, and the steps that will need to be taken to get there.
Number of Pages in PDF File: 15
Keywords: financial crises, leverage, systemic risk, healthy financial system
JEL Classification: G21, G28
Date posted: December 26, 2013 ; Last revised: January 12, 2014