Lessons from the Financial Crisis
First published:
ISBN: 9781782720836
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The Shadow Banking System and Hyman Minsky’s Economic Journey
Paul McCulley
Introduction to 'Lessons from the Financial Crisis'
The Credit Crunch of 2007: What Went Wrong? Why? What Lessons Can be Learned?
Underwriting versus Economy: A New Approach to Decomposing Mortgage Losses
The Shadow Banking System and Hyman Minsky’s Economic Journey
The Collapse of the Icelandic Banking System
The Quant Crunch Experience and the Future of Quantitative Investing
No Margin for Error: The Impact of the Credit Crisis on Derivatives Markets
The Re-Emergence of Distressed Exchanges in Corporate Restructurings
Modelling Systemic and Sovereign Risks
Measuring and Managing Risk in Innovative Financial Instruments
Forecasting Extreme Risk of Equity Portfolios with Fundamental Factors
Limits of Implied Credit Correlation Metrics Before and During the Crisis
Another view on the pricing of MBSs, CMOs and CDOs of ABS
Pricing of Credit Derivatives with and without Counterparty and Collateral Adjustments
A Practical Guide to Monte Carlo CVA
The Endogenous Dynamics of Markets: Price Impact, Feedback Loops and Instabilities
Market Panics: Correlation Dynamics, Dispersion and Tails
Financial Complexity and Systemic Stability in Trading Markets
The Martingale Theory of Bubbles: Implications for the Valuation of Derivatives and Detecting Bubbles
Managing through a Crisis: Practical Insights and Lessons Learned for Quantitatively Managed Equity Portfolios
Active Risk Management: A Credit Investor’s Perspective
Investment Strategy Returns: Volatility, Asymmetry, Fat Tails and the Nature of Alpha
As we look for answers about the financial crisis, it is clear that creative financing played a massive role in propelling the global financial system to hazy new heights, before leading the way into the depths of a systemic crisis. But how did financing get so creative? It did not happen within the confines of a regulated banking system, which submits to strict regulatory requirements in exchange for the safety of government backstopping. Instead, financing got so creative through the rise of a “shadow banking system”, which operated legally, yet almost completely outside the realm of bank regulation. The rise of this system drove one of the biggest lending booms in history, and collapsed into one of the most crushing financial crises we have ever seen.
Perhaps the most lucid framework for understanding this progression comes from the work of Hyman P. Minsky, the mid-20th-century American economist whose theory on the nature of financial instability proved unnervingly prescient in explaining the rise and fall of shadow banking, and the dizzying journey of the global financial system over the past several years.
The Nature and Origin of the Shadow Banking System
The term
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