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The blind monks and the elephant : contrasting narratives of financial crisis
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Miller, Marcus, Zhang, Lei and Rastapana, Songklod (2018) The blind monks and the elephant : contrasting narratives of financial crisis. The Manchester School, 86 (S1). doi:10.1111/manc.12236 ISSN 1463-6786.
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Official URL: https://doi.org/10.1111/manc.12236
Abstract
Three persuasive narratives of the US subprime crisis are explored with reference both to theory and to emergency acts of public policy undertaken. First the role of pecuniary externalities that amplify any shocks to the quality of risk-assets held by Investment Banks and others. Second is adverse selection in marketing these assets; and third the role of financial panic in making investment-banking disaster-prone. How relevant these differing perspectives proved is attested by the nature of state support and by subsequent findings in courts of law.
As Chair of the US Federal Reserve, Janet Yellen argued that vulnerabilities within the US financial system in the mid-2000s were “numerous and familiar from past financial panics”. That the varied threats to stability featuring in these narratives should be complements and not substitutes is of more than technical interest: it helps to explain why the US financial system was so exposed to radical failure.
| Item Type: | Journal Article | |||||||||
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| Subjects: | H Social Sciences > HB Economic Theory H Social Sciences > HC Economic History and Conditions |
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| Divisions: | Faculty of Social Sciences > Economics | |||||||||
| Library of Congress Subject Headings (LCSH): | Financial crises, Finance -- Government policy, Efficient market theory, Information asymmetry, Liquidity (Economics), Debtor and creditor | |||||||||
| Journal or Publication Title: | The Manchester School | |||||||||
| Publisher: | Wiley-Blackwell Publishing Ltd. | |||||||||
| ISSN: | 1463-6786 | |||||||||
| Official Date: | September 2018 | |||||||||
| Dates: |
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| Volume: | 86 | |||||||||
| Number: | S1 | |||||||||
| DOI: | 10.1111/manc.12236 | |||||||||
| Status: | Peer Reviewed | |||||||||
| Publication Status: | Published | |||||||||
| Reuse Statement (publisher, data, author rights): | This is the peer reviewed version of the following article: Miller, M. , Rastapana, S. and Zhang, L. (2018), The Blind Monks and the Elephant: Contrasting Narratives of Financial Crisis. The Manchester School, 86: 83-109. doi:10.1111/manc.12236, which has been published in final form at https://doi.org/10.1111/manc.12236. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions. | |||||||||
| Access rights to Published version: | Restricted or Subscription Access | |||||||||
| Date of first compliant deposit: | 21 May 2018 | |||||||||
| Date of first compliant Open Access: | 29 August 2020 | |||||||||
| RIOXX Funder/Project Grant: |
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