What causes a financial crisis? Can financial crises be anticipated or even avoided? What can be done to lessen their impact? Should governments and international institutions intervene? Or should financial crises be left to run their course? In the aftermath of the recent Asian financial crisis, many blamed international institutions, corruption, governments, and flawed macro and microeconomic policies not only for causing the crisis but also unnecessarily lengthening and deepening it. Based on ten years of research, the authors develop a theoretical approach to analyzing financial crises. Beginning with a review of the history of financial crises and providing readers with the basic economic tools needed to understand the literature, the authors construct a series of increasingly sophisticated models. Throughout, the authors guide the reader through the existing theoretical and empirical literature while also building on their own theoretical approach. The text presents the modern theory of intermediation, introduces asset markets and the causes of asset price volatility, and discusses the interaction of banks and markets. The book also deals with more specialized topics, including optimal financial regulation, bubbles, and financial contagion.

Understanding Financial Crises (Clarendon Lectures in Finance)

Business & Money

Gale, Douglas

Allen,Franklin

Economics

Oxford University Press

What causes a financial crisis? Can financial crises be anticipated or even avoided? What can be done to lessen their impact? Should governments and international institutions intervene? Or should financial crises be left to run their course? In the aftermath of the recent Asian financial crisis, many blamed international institutions, corruption, governments, and flawed macro and microeconomic policies not only for causing the crisis but also unnecessarily lengthening and deepening it. Based on ten years of research, the authors develop a theoretical approach to analyzing financial crises. Beginning with a review of the history of financial crises and providing readers with the basic economic tools needed to understand the literature, the authors construct a series of increasingly sophisticated models. Throughout, the authors guide the reader through the existing theoretical and empirical literature while also building on their own theoretical approach. The text presents the modern theory of intermediation, introduces asset markets and the causes of asset price volatility, and discusses the interaction of banks and markets. The book also deals with more specialized topics, including optimal financial regulation, bubbles, and financial contagion.

Franklin Allen and Douglas Gale have contributed substantially to the study of financial innovation, developing economic models to address the question of whether the market provides institutions and opportunities for individuals to share risks efficiently. In this book they assemble some of their key papers along with a five-chapter overview that not only synthesizes their work but provides a historical and institutional review and a discussion of alternative approaches as well. The lengthy overview surveys the authors' approach to financial innovation, principally their development of a basic theory of risk sharing in an economy with incomplete markets. The first two chapters summarize the history of innovation and illustrate the types of innovation, innovators, and motives for innovation. Chapters three and four look at industrial organization approaches to innovation and outline the authors' theory. The fifth chapter discusses other approaches and an agenda for future research.

Financial Innovation and Risk Sharing

Mit Pr

Comparing Financial Systems

Financial systems are crucial to the allocation of resources in a modern economy. They channel household savings to the corporate sector and allocate investment funds among firms; they allow intertemporal smoothing of consumption by households and expenditures by firms; and they enable households and firms to share risks. These functions are common to the financial systems of most developed economies. Yet the form of these financial systems varies widely. In the United States and the United Kingdom competitive markets dominate the financial landscape, whereas in France, Germany, and Japan banks have traditionally played the most important role. Why do different countries have such different financial systems? Is one system better than all the others? Do different systems merely represent alternative ways of satisfying similar needs? Is the current trend toward market-based systems desirable? Franklin Allen and Douglas Gale argue that the view that market-based systems are best is simplistic. A more nuanced approach is necessary. For example, financial markets may be bad for risk sharing; competition in banking may be inefficient; financial crises can be good as well as bad; and separation of ownership and control can be optimal. Financial institutions are not simply veils, disguising the allocation mechanism without affecting it, but are crucial to overcoming market imperfections. An optimal financial system relies on both financial markets and financial intermediaries.

The authors argue that the view that market-based systems are best is simplistic; a more nuanced approach is necessary.
Financial systems are crucial to the allocation of resources in a modern economy. They channel household savings to the corporate sector and allocate investment funds among firms; they allow intertemporal smoothing of consumption by households and expenditures by firms; and they enable households and firms to share risks. These functions are common to the financial systems of most developed economies. Yet the form of these financial systems varies widely. In the United States and the United Kingdom competitive markets dominate the financial landscape, whereas in France, Germany, and Japan banks have traditionally played the most important role.
Why do different countries have such different financial systems? Is one system better than all the others? Do different systems merely represent alternative ways of satisfying similar needs? Is the current trend toward market-based systems desirable? Franklin Allen and Douglas Gale argue that the view that market-based systems are best is simplistic. A more nuanced approach is necessary. For example, financial markets may be bad for risk sharing; competition in banking may be inefficient; financial crises can be good as well as bad; and separation of ownership and control can be optimal. Financial institutions are not simply veils, disguising the allocation mechanism without affecting it, but are crucial to overcoming market imperfections. An optimal financial system relies on both financial markets and financial intermediaries.

The MIT Press

Franklin Allen and Douglas Gale have contributed substantially to the study of financial innovation, developing economic models to address the question of whether the market provides institutions and opportunities for individuals to share risks efficiently. In this book they assemble some of their key papers along with a five-chapter overview that not only synthesizes their work but provides a historical and institutional review and a discussion of alternative approaches as well.The lengthy overview surveys the authors' approach to financial innovation, principally their development of a basic theory of risk sharing in an economy with incomplete markets. The first two chapters summarize the history of innovation and illustrate the types of innovation, innovators, and motives for innovation. Chapters three and four look at industrial organization approaches to innovation and outline the authors' theory. The fifth chapter discusses other approaches and an agenda for future research.

Finance

MIT Press]

Strategic Foundations of General Equilibrium: Dynamic Matching and Bargaining Games (Churchill Lectures in Economics)

The theory of competition has held a central place in economic analysis since the time of Adam Smith. This book, written by one of the most distinguished of contemporary economic theorists, reports on a major research program to provide strategic foundations for the theory of competition. Making use of insights from game theory, search theory and bargaining theory, the author develops a model to explain what actually goes on in markets and how a competitive general equilibrium is achieved. Essential reading for graduate courses in game theory and general equilibrium.

Cambridge University Press

Money: In Disequilibrium (Cambridge Economic Handbooks)

Nisbet

See the best price to sell, buy, or rent books by Gale, Douglas. BookScouter helps to compare book prices from 25+ online bookstores and 30+ buyback vendors with a single search.

Books by Gale, Douglas

See the best price to sell, buy, or rent books by Gale, Douglas. BookScouter helps to compare book prices from 25+ online bookstores and 30+ buyback vendors with a single search.

Understanding Financial Crises (Clarendon Lectures in Finance)

Understanding Financial Crises (Clarendon Lectures in Finance)

Financial Innovation and Risk Sharing

Comparing Financial Systems

Comparing Financial Systems

Financial Innovation and Risk Sharing

Strategic Foundations of General Equilibrium: Dynamic Matching and Bargaining Games (Churchill Lectures in Economics)

Strategic Foundations of General Equilibrium: Dynamic Matching and Bargaining Games (Churchill Lectures in Economics)

Money: In Disequilibrium (Cambridge Economic Handbooks)