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Conclusions and Our Financial Future

In: The Next Financial Crisis and How to Save Capitalism

Author

Listed:
  • Hossein Askari

    (George Washington University)

  • Abbas Mirakhor

    (International Centre for Education in Islamic Finance (INCEIF))

Abstract

The financialization of the economy has brought a number of interrelated problems: financial crises that have led to severe economic downturns with high unemployment, declining economic opportunities, stagnant real wages, and reduced economic growth and thus growing income and wealth inequality. It is time to make a bold change by putting our financial house in order and on a better path. Higher capital requirements for banks, better regulations, supervision and enforcement, and the like are invariably helpful, but at best they will only delay the inevitable, another devastating financial crisis. The prevalence of debt financing is at the heart of the problem. We need more fundamental reform of our financial system that reduces the supremacy of debt, encourages risk-sharing finance, and increases the fraction of reserves in fractional reserve banking.

Suggested Citation

  • Hossein Askari & Abbas Mirakhor, 2015. "Conclusions and Our Financial Future," Palgrave Macmillan Books, in: The Next Financial Crisis and How to Save Capitalism, chapter 5, pages 63-72, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-137-54437-7_5
    DOI: 10.1057/9781137544377_5
    as

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