The Dark Matter of Financial Globalization
It is now clear that allowing banks and other financial institutions to collect fees for mortgage-related transactions while offloading the credit risk was a recipe for reckless lending. So reforms are needed to address the negative effects – including increased systemic risk – of financial liberalization, and to prevent financial turmoil from causing severe economic damage.
https://prosyn.org/EIjimwt
The recent turmoil in global financial markets – and the liquidity and credit crunch that followed – raises two questions: how did defaulting sub-prime mortgages in the American states of California, Nevada, Arizona, and Florida lead to a worldwide crisis? And why did systemic risk increase rather than decrease in recent years?