Robert Shiller examined the controversy of the global economic crisis and its management and raised prudent arguments about the practice. The economist argues that democratization of finance provides an ideal strategy of managing the contemporary and future economic crisis. Some analysts support Shiller’s perspective while others have criticized his ideology. Interestingly, few economists argue that the financial regulations adopted by the OECD countries are sufficient in containing financial crisis (Gray & Akseli, 2011 p. 2). Considering the magnitude of the idea of global financial crisis management, there is a need of developing knowledge of ideal approaches of managing the problem. This article provides an analysis of the debate started by Shiller concerning democratizing finance while comparing the argument with the types of regulatory measures practiced by the OECD countries. The Shiller’s perspective on financial crisis Shiller explores the importance of moral reputation of finance institutions in management of economic crisis. After the 2008 global economic recession, anger expressed itself in objections around the world. People constantly criticized how powerful profit oriented social-economic procedures have influenced financial institutions. The Occupy movement staged serious actions challenging the relationship between the government and businesses. A clear insight was that individuals responsible for the crisis would revitalize their moral reputations by adopting acceptable financial procedures (Kroszner, Shiller & Friedman, 2011 p. 4). Shiller has popularized an idea that economists need to reclaim the finance for the common good instead of condemning it. He argues that finance is a powerful tool that the society can utilize in solving its problem and in developing its general welfare. The global economy needs more finance but not less and the finance should facilitate the attainment of the society’s goals (Tropeano, 2011 p. 5). Consequently, the analyst emphasizes the need of rethinking about finance and its responsibility in the society. Particularly, Shiller claims that financial management should not merely include the manipulation of money or control of risks but should mainly involve the stewardship of community’s assets. The economist highlights how individuals serving in the financial careers can manage, safeguard and increase the public assets. Moreover, the analyst explains how finance has contributed to the good of the society through inventions, savings accounts, mortgage and pensions. Consequently, Shillers insists that economists and policy makers should devise new strategies for rechanneling financial creativity to benefit global economies (Princeton University, 2012 p. 1). Previous regulations schemes have targeted restricting the financial sector by slowing down the development of lending or trading. However, Shiller’s alternative believes that this ideology is unproductive especially in the current dynamic industry that presents high degrees of dynamism. The Shiller’s model values the importance of creativity, personal morality, education and effect of finance on the people’s lives (Princeton University, 2012 p. 1). Shiller supports the present financial regulation system arguing that although the system is imperfect, it plays a significant role in stabilizing the global economy.
FINANCIAL CRISIS REGULATION Name: Instructor: Task: Financial crisis regulation Introduction The economic crisis that began in the year 2007 has attracted attentions of various economists. Policy makers and analysts are constantly searching for strategic procedures for managing economic crisis to develop strong economies…
1). The problems in the United States financial system triggered almost worldwide repercussions and lead to regulatory responses on both national and international levels with calls for greater cooperation among countries to avert another crisis. In an attempt to prevent a reoccurrence of the situation and to deal with the problems that caused this crisis, both regulatory and market based solutions have been proposed (Chang 2010, p.
The mortgage loans were backed by exotic securities on which unsuspecting investors had invested their money. The investors included investment banks who had only invested public money held by them on fiduciary capacity. Fiduciary relationship should be highly regulated.
EVALUATE THE MAIN EU REGULATORY REACTIONS TO THE FINANCIAL CRISIS INCLUDING THE CHANGES TO THE EU REGULATORY PROCESS FOR FINANCIAL SERVICES (Author’s name) (Institutional Affiliation) Introduction The financial crisis that rocked the European Union from 2007-2009 affected the economies largely because the mega financial institutions within Europe were operating in a similar business model to that of the United States prior to the crisis.
It argued in the essay, that the economic and political measures, introduced by governments to overcome the crisis, was not truly effective. Existing regulatory framework was unable to control the process and finally the use and misuse of the stimuli money with regards to the outlandish bonuses that were paid to many top ranking bank officials.
t has been able to confront the recession; on the other hand, it has been proved that the recession’s effects are stronger in markets that were highly based on faulty financial products – like the subprime products in the USA market. In the case of the recent financial
system had been increasingly deregulated in an attempt to achieve greater efficiency, but the increasingly liberal policies have progressed to a point when innovative contracts have been implemented with less than diligent study and with a disregard for risk in the face of
This paper will therefore discuss the theoretical foundation of states regulatory response to the financial crisis taking into account how these theories have been applied in different countries like the United States, United Kingdom and Poland.
The financial crisis that rocked the European Union from 2007-2009 affected the economies largely because the mega financial institutions within Europe were operating in a similar business model to that of the United States prior to the crisis. Evidently, the financial crisis began in the second quarter of 2006 in the United States.
of 2007 to 2009 indicated the implications of excessive neo-liberal approach of the economies which was developed by the government through policies that encourage huge spending in the economy with an expectation of growth of the national economic status. The excessive spending
The main fault of the Board of Directors of Enron was to trust blindly on Arthur Anderson, the auditor who was continuously writing in favor of the financial condition of Enron during 1998, 1999 and 2000. The company has many reasons for failure which are as
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