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Author/Editor:
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Bhatia, Ashok Vir ; Bayoumi, Tamim
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Publication Date:
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June 01, 2012
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Electronic Access:
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Free Full text
(PDF file size is 2,027KB).
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.
The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
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Summary:
This paper questions the view that leverage should have forewarned us of the global financial crisis of 2007-09, pointing to several gearing indicators that were neither useful portents of the onset of the crisis nor of its ferocity. Instead it shows, first, that the use of ill-suited collateral in the secured funding operations of U.S.-based investment banks was the fatal link between the collapse of structured finance and the global malfunction of funding markets that turbocharged the downdraft; and, second, that this insight (and others) can be decrypted from the Flow of Funds Accounts of the United States.
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Order a print copy
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Series:
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Working Paper No. 12/162
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Subject(s):
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Banks | Borrowing | Consumer credit | Credit expansion | Financial crisis | Financial instruments | Financial sector | Loans | Private sector | United States
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Author's Keyword(s):
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Leverage | securitization | collateral | investment banking |
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English
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Publication Date:
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June 01, 2012
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Format:
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Paper
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Stock No:
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WPIEA2012162
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Pages:
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29
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Price:
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US$18.00 )
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Please address any questions about this title to
publications@imf.org
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