Summary of Toward a Run-Free Financial System
Published in “Across The Great Divide: New Perspectives on the Financial Crisis.” Published jointly by Hoover and Brookings.
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In 2008, runs on financial institutions had a devastating impact on the world’s economy. University of Chicago professor John H. Cochrane says runs were the major culprits behind the crisis and believes the same thing could easily happen again in today’s environment. He explains why overregulation will not work, and advocates restructuring the financial system through measures such as shoring up bank equity and avoiding run-prone assets. Cochrane effectively pokes holes in the current American financial and regulatory systems. His proposals, many of which echo those under consideration in Europe, may make sense for the United States as well. getAbstract recommends this report to financial executives, analysts and policy makers who might be intrigued by this line of thinking.
In this summary, you will learn
- How runs on the financial system contributed to the 2008 financial crisis,
- Why current regulations are unlikely to halt such runs in the future and
- What alternative measures could lead to a “run-free financial system.”
About the Author
John H. Cochrane is a finance professor at the University of Chicago Booth School of Business.