Research Catalog

Title

Systemic financial risk.

Publication

Paris : OECD, c2012.

Items in the Library & Off-site

Holdings

Details

Additional Authors

Organisation for Economic Co-operation and Development.

Description

75 p. : ill.; 28 cm.

Summary

This report analyses the results of simulations using an agent based model of financial markets to show how excessive levels of leverage in financial markets can lead to a systemic crash. Investors overload on risky assets betting more than they have to gamble creating a tremendous level of vulnerability in the system as a whole. Plummeting asset prices render banks unable or unwilling to provide credit as they fear they might be unable to cover their own liabilities due to potential loan defaults. Whether an overleveraged borrower is a sovereign nation or major financial institution, recent history illustrates how defaults carry the risk of contagion in a globally interconnected economy. The resulting slowdown of investment in the real economy impacts actors at all levels, from small businesses to homebuyers. Bankruptcies lead to job losses and a drop in aggregate demand, leading to more businesses and individuals being unable to repay their loans, reinforcing a downward spiral that can trigger a recession, depression or bring about stagflation in the real economy. This can have a devastating impact not only on economic prosperity across the board, but also consumer sentiment and trust in the ability of the system to generate long-term wealth and growth

Series Statement

OECD reviews of risk management policies, 1993-4106

Uniform Title

OECD reviews of risk management policies

Subject

• Financial risk management
• Financial risk
• Financial leverage

Bibliography (note)

• Includes bibliographical references.

Additional Formats (note)

• Also available online.

ISBN

• 9789264112728 (print)
• 9264112723 (print)
• 9789264167711 (pdf)
• 9264167714 (pdf)

OCLC

• on1347187797
• SCSB-14314103

Owning Institutions

Princeton University Library