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Risk Management and the Costs of the Banking Crisis

Published online by Cambridge University Press:  26 March 2020

Patrick Honohan
Patrick Honohan*
Affiliation:
Institute for International Integration Studies, Trinity CollegeDublin CEPR
*
e-mail phonohan@tcd.ie
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Abstract

The 2007–8 banking crisis in the advanced economies has exposed deficiencies in risk management and prudential regulation approaches that rely too heavily on mechanical, albeit sophisticated, risk management models. These have aggravated private and economic losses. While fiscal costs were at first limited, it remains to be seen to what extent the taxpayer will be protected. Policymakers and bankers need to recognise the limitations of rules-based regulation and restore a more discretionary and holistic approach to risk management.

Keywords

Banking crisisprudential regulationrisk managementE32E44G28G32
Type
Articles
Information
National Institute Economic Review , Volume 206 , October 2008 , pp. 15 - 24
Copyright
Copyright © 2008 National Institute of Economic and Social Research

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