Financial Restructuring to Sustain Recovery

Financial Restructuring to Sustain Recovery

MARTIN NEIL BAILY
RICHARD J. HERRING
YUTA SEKI
Copyright Date: 2013
Pages: 180
https://www.jstor.org/stable/10.7864/j.ctt6wpcrp
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  • Book Info
    Financial Restructuring to Sustain Recovery
    Book Description:

    How much financial regulation will adequately reduce future systemic threats to the financial sector? To what extent can international authorities legally oversee the financial activities and outcomes of other transnational entities? Can macroprudential policy be aligned successfully with monetary policy to weather another boom-bust cycle?

    Editors Martin Neil Baily, Richard Herring, and Yuta Seki envision a global policy response to the financial crisis, designed to maintain sector-wide economic growth and improve profitability, rather than a response limited to secure only the strength of individual banks and nonbanks. This volume outlines how to manage factors that can endanger the financial system: how to prevent fluctuations in global capital flows; when to apply capital injection; and how to design incentives to avoid default on debt.Financial Restructuring to Sustain Recoveryunderscores the imperative of resolution procedures that reinforce sound financial governance, particularly in an effort to stave off future financial crises.

    Contributors include Kei Kodachi (Nomura Institute of Capital Markets Research), Franklin Allen (The Wharton School, University of Pennsylvania), James Barth (Auburn University College of Business; Milken Institute), Glenn Yago (Milken Institute), David Skeel (University of Pennsylvania Law School), Thomas Jackson (Simon School of Business, University of Rochester), Jay Ritter (Warrington College of Business, University of Florida).

    eISBN: 978-0-8157-2525-1
    Subjects: Economics, Business, Political Science

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. 1 Introduction: Financial Restructuring to Speed Recovery
    (pp. 1-22)
    MARTIN NEIL BAILY, RICHARD J. HERRING and YUTA SEKI

    The financial crisis of 2007–08, which led to what is now known as the Great Recession, caused more widespread economic trauma than any other event in the postwar era. This experience has raised wide-ranging questions about how to reform the financial system to enhance its resilience and prevent the reoccurrence of such episodes. And, because the recovery has been disappointingly slow and uneven, attention has also turned to possible reforms to markets and the financial infrastructure that might speed recovery.

    This volume focuses on some of those potential reforms. The Nomura Institute of Capital Markets Research, the Brookings Institution,...

  4. Part I. The U.S. Approach
    • 2 Restructuring the U.S. Housing Market
      (pp. 25-96)
      FRANKLIN ALLEN, JAMES R. BARTH and GLENN YAGO

      Housing people is one of the most important businesses in the world. The value of global housing reached a record high of slightly more than $90 trillion in 2008.¹ In the United States, residential investment averages roughly 5 percent of gross domestic product (GDP), while housing services average between 12 and 13 percent, for a combined 17 to 18 percent of GDP.² In other big countries such as China and India, housing makes up 15 and 5 percent of GDP, respectively. Housing, moreover, is an important component of wealth for its owners. Indeed, in countries such as Finland, Germany, Italy,...

    • 3 Bankruptcy and Economic Recovery
      (pp. 97-122)
      THOMAS JACKSON and DAVID SKEEL

      To measure economic growth or recovery, one traditionally looks to metrics such as the unemployment rate and the growth in gross domestic product (GDP). To devise institutional policies that will stimulate economic growth, the focus most often is on policies that encourage investment and entrepreneurial enterprises and reward risk taking with appropriate returns. As bankruptcy academics, we tend to add our own area of expertise to this stable—with the firm belief that thinking critically about bankruptcy policy is an important element of any set of institutions designed to speed economic recovery. In this paper, we outline the crucial role...

    • 4 Reenergizing the IPO Market
      (pp. 123-146)
      JAY R. RITTER

      From 1980 to 2000, an annual average of 310 operating companies went public in the United States. During 2001–12, on average, only 99 operating companies went public.¹ This decline occurred in spite of the doubling of real gross domestic product (GDP) during this thirty-three-year period. The decline was even more severe for small-company initial public offerings (IPOs), for which the average volume dropped 83 percent, from 165 IPOs a year during 1980–2000 to only 28 a year during 2001–12. Figure 4-1 illustrates the pattern on a year-by-year basis for both small and big companies. Small and big...

  5. Part II. The Japanese Approach
    • 5 Reconstructing and Revitalizing Japan’s Financial Sector
      (pp. 149-170)
      YUTA SEKI

      The u.s. economy is now overcoming the shock from what proved to be a once-in-100-years financial crisis, replete with massive losses on subprime loans and a string of major financial institution failures, headlined by Lehman Brothers. Share prices have recovered significantly, and big lenders are announcing strong earnings. More than four years after Lehman’s collapse, however, the main indicators of the real economy, including employment and the housing market, have recovered at a surprisingly tepid pace. In Europe, meanwhile, the sovereign debt crisis and the resulting fiscal austerity have kept real economic growth in negative territory well into 2013.

      The...

  6. Contributors
    (pp. 171-172)
  7. Index
    (pp. 173-182)
  8. Back Matter
    (pp. 183-184)