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\nEd Kane - Measuring Systemic Risk To Empower the Taxpayer\n

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\n\nPublisher:\n\nInstitute for New Economic Thinking\n\n\n
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\nBanks take on excessive risk since they know, in case of failure, the taxpayer will step in to rescue them. That is a form of free insurance, and Ed Kane wants to end it. To do so, he says, we need to put a number on systemic risk, the...\nBanks take on excessive risk since they know, in case of failure, the taxpayer will step in to rescue them. That is a form of free insurance, and Ed Kane wants to end it. To do so, he says, we need to put a number on systemic risk, the amount for which the taxpayer is on the hook. Kane uses the contingent claims model developed by Nobel Laureate Robert Merton to calculate the market value of the implicit insurance -- making the cost explicit, and so empowering the taxpayer. This is new economic thinking.
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Resource Details

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Educator Rating
Not yet Rated
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Media Length
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10:05
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Grade
Higher Ed
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Subjects
Social Studies & History
3 more...
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Media Type
Instructional Videos
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Source:
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\nNew Economic Thinking\n\n
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Date
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2011
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Language
English
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Audiences
For Teacher Use
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Usage Permissions
Fine Print: Educational Use
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Concepts

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banking, finance, insurance, banks, work
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ways, to, be, an, economist, ed kane, perry mehrling, systemic risk, regulation, financial crisis, credit support, financial institutions, early warning, long time, government service, macro economist, good measure, insurance premium, firms, people, crisis, assumptions, risk, authorities, today, trouble, taxpayers, give, offensive, free, political, provide
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