In this paper we review the existing literature to analyze the various implications of these developments and what they portend for bank regulation. We begin by discussing the economics of banking to better understand the fundamental forces driving the financial services industry. We discuss how banks choose between relationship and transaction lending, the role of debt versus equity instruments, and the economic functions of banks.
We conclude that banks and markets have become increasingly integrated and co-dependent, and that this is at the root of the credit crisis. In this context, we also focus on credit rating agencies and new intermediaries like private equity firms, which one could interpret as intermediation driven from the equity side, and examine their impact on financial fragility.
The Oxford Handbook of Private Equity
We address the regulatory challenge coming from financial fragility, and focus on this in the context of the "mushrooming" of the financial sector with greater diversity in institutions and an increasingly blurred distinction between intermediaries and financial markets. Oxford : Oxford University Press, , Oxford handbooks. The financial crisis of aroused widespread interest in banking and financial history among policy makers, academics, journalists, and even bankers, in addition to the wider public.
References in the press to the term 'Great Depression' spiked after the failure of Lehman Brothers in November , with similar surges in references to 'economic history' at various times during the financial turbulence. In an attempt to better understand the magnitude of the shock, there was a demand for historical parallels.
How severe was the financial crash? Was it, in fact, the most severe financial crisis since the Great Depression? Were its causes unique or part of a well-known historical pattern?
And have financial crises always led to severe depressions? Historical reflection on the recent financial crises and the long-term development of the financial system go hand in hand. This volume provides the material for such a reflection by presenting the state of the art in banking and financial history.