Leverage? What Leverage? A Deep Dive into the U.S. Flow of Funds in Search of Clues to the Global Crisis

WPIEA2012162 Image
Price:  $18.00

Author/Editor: Ashok Vir Bhatia, Tamim Bayoumi
Release Date: © June, 2012
ISBN : 978-1-47550-471-2
Stock #: WPIEA2012162
English
Stock Status: On back-order

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Description

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.

Taxonomy

Banks and banking , Economic sectors , Financial crisis , Financial institutions and markets , International financial system , Loans , Private sector




More publications in this series: Working Papers


More publications by: Ashok Vir Bhatia ; Tamim Bayoumi