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Connectedness and Contagion
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Connectedness and Contagion: Protecting the Financial System from Panics

Hal S. Scott

Abstract

The Dodd–Frank Act of 2010 was intended to reform financial policies in order to prevent another massive crisis such as the financial meltdown of 2008. Dodd–Frank is largely premised on the diagnosis that connectedness was the major problem in that crisis—that is, that financial institutions were overexposed to one another, resulting in a possible chain reaction of failures. This book argues that it is not connectedness but contagion that is the most significant element of systemic risk facing the financial system. Contagion is an indiscriminate run by short-term creditors of financial institu ... More

Keywords: Dodd–Frank Act, financial reform, 2008 financial meltdown, contagion, financial institutions, financial system, Federal Reserve, bankruptcy

Bibliographic Information

Print publication date: 2016 Print ISBN-13: 9780262034371
Published to MIT Press Scholarship Online: January 2017 DOI:10.7551/mitpress/9780262034371.001.0001

Authors

Affiliations are at time of print publication.

Hal S. Scott, author

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