Too Much Right can Make a Wrong: Setting the Stage for the Financial Crisis

  title={Too Much Right can Make a Wrong: Setting the Stage for the Financial Crisis},
  author={Richard J. Rosen},
  journal={Banking \& Insurance eJournal},
  • R. Rosen
  • Published 1 November 2009
  • Economics
  • Banking & Insurance eJournal
The financial crisis that started in 2007 exposed a number of flaws in the financial system. Many of these flaws were associated with financial instruments that were issued by the shadow banking system, especially securitized assets. The volume and complexity of securitized assets grew rapidly during the run-up to the financial crisis that began in 2007. This chapter discusses how the financial crisis can be viewed as a possible but logical outcome of a system where investors are overconfident… 
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