Redefining and Containing Systemic Risk

• Published in: Atlantic economic journal Vol. 38; no. 3; pp. 251 - 264
• Main Author: Kane, Edward J
• Format: Journal Article
• Language: English
• Published: Boston Boston : Springer US 01.09.2010; Springer US; International Atlantic Economic Society; Springer; Springer Nature B.V
• Series: Atlantic Economic Journal
• Subjects: Analysis; Default; Economic crisis; Economic policy; Economics; Economics and Finance; Employee incentives; Executive compensation; Financial crisis; Financial institutions; Financial services; Incentives; Indigent care; Insolvency; Insolvency detection; International Economics; Macroeconomics/Monetary Economics//Financial Economics; Microeconomics; Politics; Public Finance; Public officials; Rating services; Regulation; Risk; Safety net subsidies; Studies; Subsidies; Systemic risk; Taxpayers; United States; Insolvency detection; Systemic risk; Safety net subsidies; Financial crisis

Official definitions of systemic risk leave out the role of government officials in generating it. Policymakers' support of creative forms of risk-taking and their proclivity for absorbing losses in crisis situations encourage opportunistic firms to foster and exploit incentive conflicts within...