Preventing the Next Financial Crisis

The collapse of Lehman Brothers in 2008 triggered the global financial crisis, deepening the Great Recession. Private debt levels have risen, making another crisis almost inevitable. This book examines the causes of the 2007/2009 crisis and evaluates the effectiveness of responses such as Dodd-Frank Act and shadow banking regulation. It argues for an international lender of last resort and recalls Keynes' idea for an International Clearing Union to mitigate risks.

Format: Paperback / softback
Length: 160 pages
Publication date: 09 January 2023
Publisher: Taylor & Francis Ltd

The fall of Lehman Brothers, the oldest and fourth-largest US investment bank, in September 2008 marked the onset of the global financial crisis, which intensified the contraction in economic activity that had begun in December 2007 and is widely recognized as the Great Recession. Following a sluggish and uneven recovery period, levels of private debt have recently resurged, raising the likelihood of another financial crisis. This book seeks to address the critical question: Is there any way to prevent a new financial crisis or mitigate its impact?

The book begins by examining the primary factors that contributed to the 2007/2009 financial crisis and evaluating the extent to which they persist in the current financial system. The responses to the crisis, including the Dodd-Frank Act, the establishment of the Financial Stability Board, and efforts to regulate shadow banking, are assessed for their effectiveness. It is found that there is a significant risk of a new bubble forming, transparency in the financial industry remains lacking, and risk-taking among bankers and investors continues to be incentivized.

To address these risks, proposals are put forth, advocating for the establishment of an international lender of last resort and resurrecting Keynes' idea for an International Clearing Union. This book holds immense interest for scholars and students specializing in financial crises, financial stability, and alternative approaches to finance and economics.

Weight: 317g
Dimension: 234 x 156 (mm)
ISBN-13: 9780367758424