Preventing the Next Financial Failure Post–COVID–19

52 Pages Posted: 2 Feb 2021 Last revised: 10 Mar 2021

See all articles by Melissa Murphy

Melissa Murphy

Massachusetts Institute of Technology, Sloan School of Management

Date Written: January 8, 2021


While the U.S. economic position today is unlike any period in modern U.S. history, understanding the cyclical nature of financial regulation and economic behavior patterns delivers valuable insights for mitigating risk in the current environment. Spanish philosopher George Santayana is credited for the aphorism, "those who cannot remember the past are condemned to repeat it," but analyzing the last 100 years reveals patterns during periods of recession and recovery identified in this paper as the cycle of financial stability and the funnel of economic emergency. Historical patterns, economic data, and evaluation of current U.S. regulation indicate the looming threat of financial failure following the COVID-19 pandemic, making the crisis of 2020 a recession triggering event that ultimately leads to greater economic disaster. The U.S. has experienced economic crisis several times throughout history, but today's unique challenges require a different financial regulation approach. The absence of technology policies, lack of data privacy regulation, deregulated areas of the financial industry, and the nebulous industry/agency relationship create hurdles for ensuring financial stability. Without correcting financial regulation, introducing digital assets and technology conglomerates to the financial sector will result in unknown global pressure exacerbated by legislative deficiencies, drastically increasing systemic financial risk. Leveraging results from comprehensive analysis, the U.S. can prevent impending financial failure through effective financial regulation and ensure stability as the nation recovers from a deep recession and national debt crisis due to consecutive, compounding economic disasters.

Keywords: Regulation, Technology, Financial Regulation, Financial Institutions, Trends, Capitalism, History

JEL Classification: E03, E27, E4, E32, E44, E5, E6, N20, P00, P1

Suggested Citation

Murphy, Melissa, Preventing the Next Financial Failure Post–COVID–19 (January 8, 2021). Available at SSRN: or

Melissa Murphy (Contact Author)

Massachusetts Institute of Technology, Sloan School of Management ( email )

Cambridge, MA 02139
United States

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