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How Debt Markets Have Malfunctioned in the Crisis

Author

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  • KRISHNAMURTY, Arvind

    (Northwestern University)

Abstract

In this article the author discusses the three areas that are critical to all debt markets decisions: risk capital and the risk aversion, financing repo and the risk premium, as well as counterparty risks. In each of these areas feedback effects can arise, so that less liquidity and higher cost of financing can reinforce each other in contagious spiral. In conclusion, he analyze briefly four steps that the Federal Reserve System took to ease the crisis and how was geared a specific systemic fault that arouse during the crisis.

Suggested Citation

  • KRISHNAMURTY, Arvind, 2010. "How Debt Markets Have Malfunctioned in the Crisis," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 4, pages 105-130.
    • Handle: RePEc:rnp:ecopol:1046
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    Cited by:

    1. Kalemli-Ozcan, Sebnem & Papaioannou, Elias & Perri, Fabrizio, 2013. "Global banks and crisis transmission," Journal of International Economics, Elsevier, vol. 89(2), pages 495-510.
    2. Imad Jabbouri & Omar Farooq & Rachid Jabbouri, 2024. "Economic policy uncertainty nexus with the value relevance of advertising: Evidence from an emerging market," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(2), pages 2342-2359, April.

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