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Financial Crises Contagion and the Leader of the Last Resort : A Reader - Charles Goodhart

Financial Crises Contagion and the Leader of the Last Resort

A Reader

By: Charles Goodhart (Editor), Gerhard Illing (Editor)

Paperback Published: 1st February 2002
ISBN: 9780199247219
Number Of Pages: 568

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Financial crises, often of an apparently contagious nature, have become more frequent over the last two decades than they were previously. The monetary authorities, especially central banks, and, in the international context, the International Monetary Fund, have had to decide how to handle them. This has revived interest in the analysis of the role of a Lender of Last Resort (LOLR). On the one hand, such LOLR support actions have been accused of contributing to the currently increased frequency of (systemic) crises. By providing a safety net for banking activities, they are said to encourage excessive risk taking (moral hazard), thus provoking the very crises they are supposed to prevent. On the other hand, the (surprisingly) fast recovery experienced after (most of) these crises may, perhaps, be attributed to the safety net provided by LOLR facilities, which may have dampened real effects by containing contagion. Currently, the need for, and the appropriate design of, a LOLR both at the national and international level is hotly debated. There are fierce controversies about how to handle crisis management.

This book assembles a selection of the best available studies in this field, and illuminates both sides of the debate. After a substantial review of the literature, Part I Iooks back to the historical evolution of thought on the conduct of LOLR. Parts II and III review contemporary contributions to the debate. Part IV explores the international aspects of these issues. Overall, this Reader provides comprehensive and authoritative coverage of the contending views on how the authorities might respond to financial crises. It will appeal to a broad readership including financial and monetary economists, commentators on financial subjects, (central) bankers, financial regulators, and ministries of finance.

Industry Reviews

editors known for their remarkable work in the fields of monetary theory and policy ... very instructive introduction ... I can warmly recommend this book. Review of World Economics

1: Charles Goodhart and Gerhard Illing: Introduction 2: Xavier Freixas, Curzio Giannini, Glenn Hoggarth, and Farouk Soussa: Lender of Last Resort---a Review of the Literature I. Historical Analysis3: Henry Thornton: An Enquiry into the Nature and Effects of the Paper Credit of Great Britain (excerpts) 4: Walter Bagehot: A General View of Lombard Street (excerpts) 5: Thomas Humphrey and Robert Keleher: The Lender of Last Resort: a Historical Perspective 6: Michael Bordo: The Lender of Last Resort: Alternative Views and Historical Experience 7: Richard Timberlake: The Central Banking Role of Clearinghouse Associations II. Contemporary Analysis8: Marvin Goodfriend and Robert King: Financial Deregulation, Monetary Policy, and Central Banking 9: George Kaufman: Lender of Last Resort: a Contemporary Perspective 10: Fred Hirsch: The Bagehot Problem 11: Robert Solow: On the Lender of Last Resort 12: M. J. Flannery: Financial Crises, Payment System Problems, and Discount Window Lending (excerpts) 13: Charles Goodhart: Myths about the Lender of Last Resort III. Bank Runs and Contagion14: Olivier De Bandt and Philipp Hartmann: Systemic Risk in Banking: a Survey 15: Douglas W. Diamond and Philip Dybvig: Bank Runs, Deposit Insurance, and Liquidity 16: Franklin Allen and Douglas Gale: Optimal Currency Crises 17: Y. Chen: Banking Panics: the Role of the First-Come, First-Served Rule and Information Externalities 18: Franklin Allen and Douglas Gale: Financial Contagion 19: Xavier Freixas, Bruno M. Parigi, and Jean-Charles Rochet: Systemic Risk, Interbank Relations, and Liquidity Provision by the Central Bank IV. An International Lender of Last Resort?20: Forrest Capie: Can there Be an International Lender of Last Resort? 21: Anna Schwartz: Earmarks of a Lender of Last Resort 22: Meltzer Report of the International Financial Institution Advisory Commission (excerpts) 23: R. Brealey: The Asian Crisis: Lessons for Crisis Management and Prevention 24: Stanley Fischer: On the Need for an International Lender of Last Resort 25: Curzio Giannini: Pitfalls in International Crisis Lending

ISBN: 9780199247219
ISBN-10: 0199247218
Audience: Professional
Format: Paperback
Language: English
Number Of Pages: 568
Published: 1st February 2002
Publisher: Oxford University Press
Country of Publication: GB
Dimensions (cm): 23.3 x 15.6  x 3.0
Weight (kg): 0.8