Financial Crises

22 Pages Posted: 11 May 2018

See all articles by Gary B. Gorton

Gary B. Gorton

Yale School of Management; National Bureau of Economic Research (NBER); Yale University - Yale Program on Financial Stability

Multiple version iconThere are 2 versions of this paper

Date Written: January 30, 2018

Abstract

Financial crises are runs on short-term debt. Whatever its form, short-term debt is an inherent feature of a market economy. A run is an information event in which holders of short-term debt no longer want to lend to banks because they receive information leading them to suspect the value of the backing for the debt, so they run. When runs are system-wide they threaten the solvency of the entire financial system requiring either public or private intervention. Runs, which most likely follow credit booms, are integral parts of movements in the macro-economy.

Suggested Citation

Gorton, Gary B., Financial Crises (January 30, 2018). Yale ICF Working Paper No. 2018-11, Available at SSRN: https://ssrn.com/abstract=3169845 or http://dx.doi.org/10.2139/ssrn.3169845

Gary B. Gorton (Contact Author)

Yale School of Management ( email )

165 Whitney Ave
P.O. Box 208200
New haven, CT 06511
United States

HOME PAGE: http://mba.yale.edu/faculty/profiles/gorton.shtml

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Yale University - Yale Program on Financial Stability

165 Whitney Avenue
P.O. Box 208200
New Haven, CT 06520-8200
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
687
Abstract Views
3,491
Rank
78,685
PlumX Metrics