The Banking Crisis: A Rational Interpretation

Banking in Europe: Disentangling a Twin Crisis

Banking Crisis and Borrower Productivity

In this paper, we propose a theoretical model in which a banking crisis (or bank distress) causes declines in aggregate productivity. When borrowing firms need additional bank loans to continue their businesses, a high probability of bank failure discourages ex ante investments (e.g., R&D investment) by firms that enhance their productivity. In a general equilibrium setting, we also show that t...

Accounting for the Mexican banking crisis

The Mexican banking crisis of 1994]1995 has widely been interpreted as the victim of the balance-of-payments crisis, rather than its cause. After all, Mexican banks had been enjoying high capitalization ratios, deemed to be more than sufficient to deal with the increased risk of non-performing loans. This paper, however, suggests that to a large extent Mexican accounting practices } rather than...

The Banking Crisis: Causes, Consequences and Remedies

The paradigm that financial markets are efficient has provided the intellectual backbone for the deregulation of the banking sector since the 1980s, allowing universal banks to be fully involved in financial markets, and investment banks to become involved in traditional banking. There is now overwhelming evidence that financial markets are not efficient. Bubbles and crashes are an endemic feat...

Interpretation and Rational Choice*

INTRODUCTION THE INTERPRETATION OF TEXTS AND OF BEHAVIOR is closely related to the rational choice explanation of action. In this article I try to bring out two aspects of that connection. I first ask whether we can enhance our understanding of a literary text by assuming the rationality of its creator. In novels, for instance, things often happen “for a reason”—be it a reason for the author, f...