Leverage? What Leverage? A Deep Dive into the U.S. Flow of Funds in Search of Clues to the Global Crisis

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Price:  $18.00

Author/Editor: Ashok Vir Bhatia, Tamim Bayoumi
Release Date: © June, 2012
ISBN : 978-1-47550-471-2
Stock #: WPIEA2012162
Stock Status: Available

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This paper questions the view that leverage should have forewarned us of the global financial crisis of 2007-09, pointing to several gearing indicators that were neither useful portents of the onset of the crisis nor of its ferocity. Instead it shows, first, that the use of ill-suited collateral in the secured funding operations of U.S.-based investment banks was the fatal link between the collapse of structured finance and the global malfunction of funding markets that turbocharged the downdraft; and, second, that this insight (and others) can be decrypted from the Flow of Funds Accounts of the United States.


Banks and banking , Economic sectors , Financial crisis , Financial institutions and markets , International financial system , Loans , Private sector

More publications in this series: Working Papers

More publications by: Ashok Vir Bhatia ; Tamim Bayoumi