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The current financial crisis: Causes and policy issues

Author

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  • Adrian Blundell-Wignall
  • Paul Atkinson
  • Se Hoon Lee

Abstract

This article treats some ideas and issues that are part of ongoing reflection at the OECD. They were first raised in a major research article for the Reserve Bank of Australia conference in July 2008, and benefited from policy discussion in and around that conference. One fundamental cause of the crisis was a change in the business model of banking, mixing credit with equity culture. When this model was combined with complex interactions from incentives emanating from macro policies, changes in regulations, taxation, and corporate governance, the current crisis became the inevitable result. The paper points to the need for far-reaching reform for a more sustainable situation in the future.

Suggested Citation

  • Adrian Blundell-Wignall & Paul Atkinson & Se Hoon Lee, 2009. "The current financial crisis: Causes and policy issues," OECD Journal: Financial Market Trends, OECD Publishing, vol. 2008(2), pages 1-21.
    • Handle: RePEc:oec:dafkad:5ksqfbwt87bq
    DOI: 10.1787/fmt-v2008-art10-en
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    Citations

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    Cited by:

    1. Jäger, Jannik & Grigoriadis, Theocharis, 2016. "Soft budget constraints, European Central Banking and the financial crisis," Discussion Papers 2016/7, Free University Berlin, School of Business & Economics.
    2. Eichacker, Nina, 2015. "Financial liberalization and the onset of financial crisis in Western European states between 1983 and 2011: An econometric investigation," The North American Journal of Economics and Finance, Elsevier, vol. 34(C), pages 323-343.
    3. Ayadi, Rym & De Groen, Willem Pieter, 2014. "Banking Business Models Monitor 2014: Europe," CEPS Papers 9713, Centre for European Policy Studies.
    4. Kinga Niemczak, 2013. "Corporate Debt And Crisis Severity In Europe," "e-Finanse", University of Information Technology and Management, Institute of Financial Research and Analysis, vol. 9(1), pages 35-43, May.
    5. Michal Jurek & Pawel Marszalek, 2014. "Subprime mortgages and the MBSs in generating and transmitting the global financial crisis," Working papers wpaper40, Financialisation, Economy, Society & Sustainable Development (FESSUD) Project.
    6. Christos Triantopoulos, 2014. "Financial Structure, Income Inequality and Privatization of Risk in the EU," SPOUDAI Journal of Economics and Business, SPOUDAI Journal of Economics and Business, University of Piraeus, vol. 64(3), pages 49-72, July-Sept.
    7. McGowan, Danny & Nguyen, Huyen & Schaeck, Klaus, 2024. "Deposit competition and mortgage securitization," IWH Discussion Papers 6/2021, Halle Institute for Economic Research (IWH), revised 2024.
    8. Ozili, Peterson K, 2024. "Causes and consequences of the 2023 banking crisis," MPRA Paper 120153, University Library of Munich, Germany.
    9. Karim, Dilruba & Liadze, Iana & Barrell, Ray & Davis, E. Philip, 2013. "Off-balance sheet exposures and banking crises in OECD countries," Journal of Financial Stability, Elsevier, vol. 9(4), pages 673-681.
    10. Lakshmi, Geeta, 2018. "Gekko and black swans: Finance theory in UK undergraduate curricula," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 52(C), pages 35-47.
    11. repec:rze:efinan:v:9:y:2012:i:1:p:35-43 is not listed on IDEAS
    12. Talla M Aldeehani, 2016. "Has the risk index of Islamic banks and conventional banks in GCC countries changed in response to the 2008 economic crisis?," Journal of Economic and Financial Studies (JEFS), LAR Center Press, vol. 4(4), pages 20-33, August.
    13. Hussein Tarraf, 2011. "The Role Of Corporate Governance In The Events Leading Up To The Global Financial Crisis: Analysis Of Aggressive Risk-Taking," Global Journal of Business Research, The Institute for Business and Finance Research, vol. 5(4), pages 93-105.
    14. Silvia Gaia, 2013. "La remunerazione dell?amministratore delegato durante la crisi finanziaria: un?analisi empirica," MANAGEMENT CONTROL, FrancoAngeli Editore, vol. 2013(2), pages 111-128.
    15. Özgür Orhangazi, 2014. "Financial deregulation and the 2007-08 US financial crisis," Working papers wpaper49, Financialisation, Economy, Society & Sustainable Development (FESSUD) Project.
    16. Blundell-Wignall, Adrian & Atkinson, Paul, 2009. "Origins of the financial crisis and requirements for reform," Journal of Asian Economics, Elsevier, vol. 20(5), pages 536-548, September.
    17. Tiago Miguel Sá & Elisabete Duarte Neves & Cristina Gonçalves Góis, 2017. "The influence of corporate governance on changes in risk following the global financial crisis: evidence from the Portuguese stock market," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 21(4), pages 841-878, December.

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