Leverhulme Lecture: The Global Financial Crisis and Systemic Risk

Abstract

This lecture examines the causes of the global financial crisis, showing it was triggered by market failures, not by financial institution failures, and arguing that any regulatory framework for managing systemic risk must address markets as well as institutions. The lecture also analyzes how regulation should be designed under that broader framework to mitigate systemic risk and its consequences. Finally, the lecture examines the potential systemic effects of sovereign debt crises, demonstrating how regulation can mitigate those effects.