LOGIN TO YOUR ACCOUNT

Username
Password
Remember Me
Or use your Academic/Social account:

CREATE AN ACCOUNT

Or use your Academic/Social account:

Congratulations!

You have just completed your registration at OpenAire.

Before you can login to the site, you will need to activate your account. An e-mail will be sent to you with the proper instructions.

Important!

Please note that this site is currently undergoing Beta testing.
Any new content you create is not guaranteed to be present to the final version of the site upon release.

Thank you for your patience,
OpenAire Dev Team.

Close This Message

CREATE AN ACCOUNT

Name:
Username:
Password:
Verify Password:
E-mail:
Verify E-mail:
*All Fields Are Required.
Please Verify You Are Human:
fbtwitterlinkedinvimeoflicker grey 14rssslideshare1
Cohen, Ben; Remolona, Eli (2008)
Publisher: Asian Development Bank Institute (ADBI) Tokyo
Languages: English
Types: Unknown
Subjects: E44, E32, G21, G24, E58, financial crisis; capital regulations; credit ratings; financial system procyclicality, G14, G28, G18
ddc: ddc:330
While the unfolding financial turmoil has involved new elements, more fundamental elements have remained the same. New elements include structured credit, the originate-to-distribute business model and the tri-party repurchase agreement. The recurrence of crises reflects a basic procyclicality in the system, which is characterized by a build-up of risk-taking and leverage in good times and an abrupt withdrawal from risk and an unwinding of leverage in bad times. To deal with the adverse liquidity spiral that has characterized the current crisis, central banks have tried to strike a balance between the importance of the continued availability of market liquidity as a public good and the moral hazard that any market intervention may induce. In proposing long-term responses to the crisis, the Financial Stability Forum has focused on areas where incentives for risk-taking may be aligned more properly and areas where risk management may be made more robust. Nonetheless a recognition that the procyclicality of the system lies at the root of the crisis would suggest more aggressive countercyclical measures are needed.

Share - Bookmark

Cite this article