New theories to underpin financial reform

New theories to underpin financial reform

Before 2007, financial crises were not widely studied in economics and finance. The lack of importance ascribed to financial stability and our limited knowledge of this topic were significant contributors to the crisis. This paper suggests five areas where new theories are needed. These are asset price bubbles, central bank checks and balances, global imbalances, banking regulation, and competition in financial services.

Franklin Allen and Elena Carletti

Journal of Financial Stability

June 2013

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