The Current Financial Crisis: Causes and Policy Issues
OECD - Financial Market Trends 2008
Download Document| Date Published | 2008 |
| Version | |
| Primary Author | Adrian Blundell-Wignall |
| Other Authors | Paul Atkinson Se Hoon Lee |
| Theme | Global Financial Crisis |
| Country |
Abstract
This article treats some ideas and issues that are part of ongoing reflection at the OECD. They were first raised in a major research article for the Reserve Bank of Australia conference in July 2008, and benefited from policy discussion in and around that conference. One fundamental cause of the crisis was a change in the business model of banking, mixing credit with equity culture. When this model was combined with complex interactions from incentives emanating from macro policies, changes in regulations, taxation, and corporate governance, the current crisis became the inevitable result. The paper points to the need for far-reaching reform for a more sustainable situation in the future.