Global Financial Systems: Stability and Risk, 1st edition
Published by Pearson (August 7, 2013) © 2014
- Jon Danielsson Systemic Risk Centre London School of Economics
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Global Financial Systems is an innovative, interdisciplinary text that explores the ‘why’ behind global financial stability. Danielsson draws on economic theory, finance, mathematical modelling, risk theory, and policy to posit a coherent and current analysis of the global financial system.
- An opening example, article or journal excerpt to frame the issues in the chapter and pique student interest
- Frequent examples and cases used to illustrate or substantiate arguments made in the text
- Chapter summaries that confirm key issues from each chapter
- Chapter-end questions that provoke discussion and critical thinking
Supplementary resources include:
- Instructor’s manual, with case study debriefs, further reading suggestions, and tutorial ideas
- Class-tested PowerPoint slides, including the financial models presented and other important themes from each chapter
- A author-hosted website, featuring regular updates on current events in the global financial system, links to useful websites, and further assessment material
Author’s acknowledgements
Publishers’ acknowledgments
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Introduction
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1 Systemic risk
1.1 Case study: the 1914 crisis
1.2 The concept of systemic risk
1.3 Who creates systemic risk?
1.4 Fundamental origins of systemic risk
1.5 Summary
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References
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2 The Great Depression 1929–1933
2.1 Build-up to a depression
2.2 The Great Depression
2.3 Causes of the Great Depression
2.4 Implications for future policy
2.5 Summary
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3 Endogenous risk
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3.1 Millennium Bridge
3.2 Dual role of prices
3.3 Risk
3.4 Dynamic trading strategies
3.5 Actual and perceived risk and bubbles
3.6 The LTCM crisis of 1998
3.7 Conclusion
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4 Liquidity
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4.1 The liquidity crisis of 1998
4.2 What is liquidity?
4.3 Liquidity models
4.4 Policy implications
4.5 Summary
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References
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5 The central bank
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5.1 The origins of central banks
5.2 Banking supervision
5.3 Monetary policy
5.4 Financial stability
5.5 Bailing out governments
5.6 Challenges for central banking
5.7 Summary
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Appendix: central bank interest rate
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References
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6 The Asian Crisis of 1997 and the IMF
6.1 Building up to a crisis
6.2 The crisis in individual countries
6.2.3 South Korea
6.3 Reasons for the crisis
6.4 Policy options for the crisis countries
6.5 Role of the IMF
6.6 Wider lessons
6.7 Summary
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References
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7 Banking crises
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7.1 Money and early banking
7.2 Moral hazard
7.3 Costs of banking crises
7.4 Causes of banking crises
7.5 Bank and banking system failures
7.6 Summary
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References
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8 Bank runs and deposit insurance
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8.1 Bank runs and crises
8.2 Modelling deposit insurance
8.3 Pros and cons of deposit insurance
8.4 Summary
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References
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9 Trading and Speculation
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9.1 Trading scandals and abuse
9.2 Trading and risk
9.3 Trading activities
9.4 Policy issues
9.5 Summary
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References
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Appendix: basic terminology of trading
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10 Credit markets
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10.1 Market for credit
10.2 Credit rating agencies
10.3 Credit models
10.4 Margins, haircuts and mark–to–market
10.5 Securitisation
10.6 Summary
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11 Currency markets
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11.1 Fixed or floating
11.2 Foreign exchange interventions
11.2.1 Sterilisation
11.3 Capital controls
11.4 Exchange rate regimes
11.5 Perils of overvaluation
11.6 Undervaluation and ‘currency wars’
11.7 Reserve currency
11.8 Summary
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Appendix: exchange rate regimes
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References
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12 Currency crisis models
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12.1 First-generation models
12.2 The Argentinean crisis
12.3 Second-generation models
12.4 European crisis 1992–1993
12.5 Global games currency crisis model
12.6 Summary
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References
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13 Financial regulations
13.1 Banking regulations
13.2 Bank capital
13.3 International financial regulations: Basel
13.4 Summary
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Appendix: Value-at-Risk
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References
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14 Bailouts
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14.1 Successful and unsuccessful bailouts
14.2 The historical origins of lending of last resort (LOLR)
14.3 What
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