9780137050123

The Global Economic System How Liquidity Shocks Affect Financial Institutions and Lead to Economic Crises

by ; ; ;
  • ISBN13:

    9780137050123

  • ISBN10:

    0137050127

  • Edition: 1st
  • Format: Hardcover
  • Copyright: 2011-06-12
  • Publisher: FT Press

Note: Supplemental materials are not guaranteed with Rental or Used book purchases.

Purchase Benefits

List Price: $34.99 Save up to $8.75
  • Buy Used
    $26.24

    USUALLY SHIPS IN 2-4 BUSINESS DAYS

Supplemental Materials

What is included with this book?

Summary

This is the first professional-level authoritative guide to today's global financial system: how it works, how its elements fit together, and the vulnerabilities that can cause it to fail. Writing for working financial professionals and other sophisticated readers, the authors thoroughly explain the modern global credit system; the roles of banks, hedge funds, insurers, central banks, mortgage markets, and other participants; and the credit-related instruments they rely on. In particular, the authors illuminate the crucial importance of liquidity, and show why liquidity failures have been the key cause of all major market crashes for the past several decades.The Global Financial Systemthoroughly examines economic environments in which slow de-leveraging leads to prolonged sluggish growth, and compares today's environment to other periods of deleveraging, such as the Great Depression and the Japanese economic meltdown of the '90s and '00s. It predicts potential pathways for the current crisis, and offers essential guidance to both policymakers and investment decision-makers.

Author Biography

George Chacko is Associate Professor of Finance at Santa Clara University’s Leavey School of Business and formerly Associate Professor at Harvard Business School, Managing Director at State Street Bank, and Chief Investment Officer at Auda Alternative Investments. He holds a Ph.D. and M.A. in Business Economics from Harvard University and a B.S. from MIT.

 

Carolyn L. Evans is Associate Professor of Economics at Santa Clara University. She has worked at the Federal Reserve Bank of New York, the Federal Reserve Board of Governors, and the White House Council of Economic Advisers. She holds a Ph.D. and M.A. in Economics and a B.A. in East Asian Languages and Civilizations, all from Harvard University.

 

Hans Gunawan is Senior Financial Analyst at Skyline Solar and formerly a manager of financial planning and analysis at JAPFA. He holds an MBA from Santa Clara University and a B.S. from University of California, Berkeley.

 

Anders Sjöman is Vice President of Communications at Voddler. He was formerly Senior Researcher for Harvard Business School’s Paris-based Europe Research Center. He holds an M.Sc. from the Stockholm School of Economics.

Table of Contents

Motivation for Understanding Liquidity Riskp. 1
Peso Problemp. 2
Liquidity Risk-The Peso Problem of Our Timep. 3
WorldComp. 4
Hedge Fund Returnsp. 6
The Structure of This Bookp. 8
Endnotesp. 9
Liquidity Risk: Conceptsp. 11
Introductionp. 11
What Is Liquidity?p. 11
Model of Liquidity Costsp. 15
Liquidity Risk and Liquidity Shocksp. 21
Liquidity Risk Premiump. 25
Why Bear Liquidity Risk?p. 32
Liquidity-Driven Investing (LqDI)p. 34
Liquidity Risk Exposure in Bank Balance Sheetsp. 42
Propagation of Liquidity Shocks: Systemic Riskp. 46
From Liquidity Crisis to Credit Crisisp. 50
Endnotesp. 52
The Great Depressionp. 59
The Stages of a Liquidity Shockp. 59
Recognizing a Liquidity Shock-Interpreting the Datap. 65
Setting the Stage for the Trigger-the Background for the Great Depressionp. 73
Stage 1: The Triggerp. 79
Stage 2: Change in Liquidity Demanded Throughout the Economyp. 82
Stage 3: Changes in Bank Balance Sheetsp. 85
Stage 4: Banks Change Activities to Bolster Balance Sheetsp. 87
Stage 5: Effect on Liquidity and Availability of Credit Throughout the Economyp. 90
Stage 6: Real Effects of Decline in Liquidity Observed Throughout the Economyp. 93
Conclusion: The Great Depression, a True Liquidity Shockp. 98
Endnotesp. 100
Referencesp. 103
Japan's Lost Decadep. 105
The Stages of a Liquidity Shock-Revisited and Expandedp. 105
Recognizing a Liquidity Shock-Interpreting the Datap. 110
Setting the Stage for the Trigger-the Background to Japan's Lost Decadep. 117
Stage 1: The Triggerp. 124
Stage 2: Change in Liquidity Demanded Throughout the Economyp. 125
Stage 3: Changes in Bank Balance Sheetsp. 129
Stage 4: Banks Change Activities to Bolster Balance Sheetsp. 141
Stage 5: Effect on Liquidity and Availability of Credit Throughout the Economyp. 149
Stage 6: Real Effects of Decline in Liquidity Observed Throughout the Economyp. 155
Conclusion: Japan's Lost Decade, a Liquidity Shock That Dragged Onp. 161
Endnotesp. 162
Referencesp. 169
The Great Recessionp. 173
The Stages of a Liquidity Shock-Same Applies Now as with the Great Depressionp. 173
Recognizing a Liquidity Shock-Interpreting the Datap. 176
Setting the Stage for the Trigger-the Background to the Great Recessionp. 182
Stage 1: The Triggerp. 196
Stage 2: Change in Liquidity Demanded Throughout the Economyp. 201
Stage 3: Changes in Bank Balance Sheetsp. 205
Stage 4: Banks Change Activities to Bolster Balance Sheetsp. 212
Stage 5: Effect on Liquidity and Availability of Credit Throughout the Economyp. 217
Stage 6: Real Effects of Decline in Liquidity Observed Throughout the Economyp. 224
Conclusionp. 237
Endnotesp. 238
Referencesp. 243
Conclusionp. 247
A Liquidity Crisisp. 247
Bank Accounting Changesp. 249
Bank Nationalizationp. 250
Debt Guaranteesp. 252
Central Bank Lendingp. 253
Monetary Policyp. 255
Fiscal Spendingp. 256
Preventing Liquidity Crisesp. 258
Endnotesp. 259
Indexp. 261
Table of Contents provided by Ingram. All Rights Reserved.

Rewards Program

Reviews for The Global Economic System How Liquidity Shocks Affect Financial Institutions and Lead to Economic Crises (9780137050123)