Bubbles and Crises
نویسندگان
چکیده
In recent ®nancial crises a bubble, in which asset prices rise, is followed by a collapse and widespread default. Bubbles are caused by agency relationships in the banking sector. Investors use money borrowed from banks to invest in risky assets, which are relatively attractive because investors can avoid losses in low payoff states by defaulting on the loan. This risk shifting leads investors to bid up the asset prices. Risk can originate in both the real and ®nancial sectors. Financial fragility occurs when positive credit expansion is insuf®cient to prevent a crisis.
منابع مشابه
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