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Systemic issues in
financial regulation: a new generation of mathematical models or better
understanding of what we’ve got? Patrick Honohan (TCD Department of Economics) Competing interpretations of risk management failures in the crisis
assign blame alternatively to distorted incentive structures for financiers
or flawed mathematical models of risk. A synthetic view recognises both of
these as endogeneous. Improved systemic risk management for
future benefit from a new generation of models of endogeneous systemic
risk, but needs to be based on a holistic view which encompasses bounded
rationality and political process as well as narrowly financial risk.
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