Suchergebnisse

"We present a model of shadow banking in which financial intermediaries originate and trade loans, assemble these loans into diversified portfolios, and then finance these portfolios externally with riskless debt. In this model: i) outside investor wealth drives the demand for riskless debt and indirectly for securitization, ii) intermediary assets and leverage move together as in Adrian and Shin (2010), and iii) intermediaries increase their exposure to systematic risk as they reduce their idiosyncratic risk through diversification, as in Acharya, Schnabl, and Suarez (2010). Under rational expectations, the shadow banking system is stable and improves welfare. When investors and intermediaries neglect tail risks, however, the expansion of risky lending and the concentration of risks in the intermediaries create financial fragility and fluctuations in liquidity over time"--National Bureau of Economic Research web site

Cover -- Title -- Copyright -- Dedication -- CONTENTS -- Acknowledgments -- Introduction -- CHAPTER 1 The Financial Crisis of 2008 -- CHAPTER 2 What Were They Thinking? -- CHAPTER 3 A Neglected Risk Model of the Financial Crisis -- CHAPTER 4 Extrapolation in Financial Markets -- CHAPTER 5 Representativeness and Diagnostic Beliefs -- CHAPTER 6 Diagnostic Expectations and Credit Cycles -- CHAPTER 7 Open Problems -- Appendix: Proofs -- References -- Index

How investor expectations move markets and the economyThe collapse of Lehman Brothers in September 2008 caught markets and regulators by surprise. Although the government rushed to rescue other financial institutions from a similar fate after Lehman, it could not prevent the deepest recession in postwar history. A Crisis of Beliefs makes us rethink the financial crisis and the nature of economic risk. In this authoritative and comprehensive book, two of today's most insightful economists reveal how our beliefs shape financial markets, lead to expansions of credit and leverage, and expose the economy to major risks.Nicola Gennaioli and Andrei Shleifer carefully walk readers through the unraveling of Lehman Brothers and the ensuing meltdown of the US financial system, and then present new evidence to illustrate the destabilizing role played by the beliefs of home buyers, investors, and regulators. Using the latest research in psychology and behavioral economics, they present a new theory of belief formation that explains why the financial crisis came as such a shock to so many people—and how financial and economic instability persist.A must-read for anyone seeking insights into financial markets, A Crisis of Beliefs shows how even the smartest market participants and regulators did not fully appreciate the extent of economic risk, and offers a new framework for understanding today's unpredictable financial waters.

We present a theory of identity politics that builds on two ideas. First, voters identify with the social group whose interests are closest to theirs and that features the strongest policy conflict with outgroups. Second, identification causes voters to slant their beliefs of self and others toward group stereotypes. The theory yields two main implications: i) voters' beliefs are polarized along the distinctive features of salient groups; ii) economic shocks that render new groups salient bring about large and non standard changes in beliefs and policies across many issues. In particular, exposure to globalization or cultural changes may induce voters to switch identities, dampening their demand for redistribution and exacerbating conflicts in other social dimensions. We show that survey evidence is broadly consistent with these implications.