Global Economic System, The: How Liquidity Shocks Affect Financial Institutions and Lead to Economic Crises

Product Author Bios

George C. Chacko (Santa Clara, CA) is Associate Professor of Finance at Santa Clara University's Leavey School of Business, former Associate Professor at Harvard Business School, and managing director at IFL.

Hans Gunawan (San Francisco, CA) is senior financial analyst at Skyline Solar. He holds an MBA from Santa Clara University.

Anders Sjoman, senior researcher for Harvard Business School's Paris-based Europe Research Center, holds an M.Sc. from the Stockholm School of Economics. Chacko and Sjoman co-authored Credit Derivatives: A Primer on Credit Risk, Modeling, and Instruments (Wharton School Publishing).

Written for financial professionals, the authors thoroughly explain the modern global credit system; the roles of banks, hedge funds, insurers, central banks, mortgage markets, and other participants; and the credit-related instruments they rely on. In particular, the authors illuminate the crucial importance of liquidity, and show why liquidity failures have been the key cause of all major market crashes for the past several decades. The Global Financial System thoroughly examines economic environments in which slow de-leveraging leads to prolonged sluggish growth, and compares today's environment to other periods of deleveraging, such as the Great Depression and the Japanese economic meltdown of the '90s and '00s. It predicts potential pathways for the current crisis, and offers essential guidance to both policymakers and investment decision-makers.

Table of Contents

Chapter 1: Motivation for Understanding Liquidity Risk     1

Chapter 2: Liquidity Risk: Concepts     11

Chapter 3: The Great Depression     59

Chapter 4: Japan’s Lost Decade     105

Chapter 5: The Great Recession     173

Chapter 6: Conclusion     247

Index     261