The mortgage loan has evolved from a local lending instrument into a major global security and its role is unparallel to other financial instruments in the process of financial globalization. This paper explains how t...The mortgage loan has evolved from a local lending instrument into a major global security and its role is unparallel to other financial instruments in the process of financial globalization. This paper explains how technology and financial innovation transformed the mortgage loan from a local security into a premier global security traded worldwide. It examines the fundamental flaws of this process and why it does not work in regards to mortgage lending and the re-securitization products that were created through financial innovation. The findings show that regulation was unable to keep pace with financial innovation, which created an environment where actors in the financial service sector were able to behave geographically irresponsibly by using information asymmetries to their advantage by par- ticipating in moral hazard activities and engaging in other immoral and unethical business practices that were centered around localized geography, which ultimately contributed to the global financial crisis. It also examines the roll of financial innovation in regard to the Lehman Brothers Mini-Bond in Hung and its role as a driving force behind China＇s newly emerging shadow banking sector. It concludes with a policy recommendation and its implication for China＇s continued economic development.展开更多
The current financial crisis is an inevitable result of the financial system accommodating a new banking business model, which endeavors to benefit, with increased innovation in financial products, from the incentives...The current financial crisis is an inevitable result of the financial system accommodating a new banking business model, which endeavors to benefit, with increased innovation in financial products, from the incentives and distortions created by the global macro liquidity policies. The failure of regulatory and supervising institutions to keep up with those innovations has undoubtedly compounded the magnitude of the debt and credit crisis.展开更多
Since the Great Depression in 1929,economists have continued soul-searching for the lessons to be drawn from the crisis.But mainstream reflections have been misguided,conf ined to stereotypical targets of blame such a...Since the Great Depression in 1929,economists have continued soul-searching for the lessons to be drawn from the crisis.But mainstream reflections have been misguided,conf ined to stereotypical targets of blame such as "lax regulation," "policy mistakes" and "underestimation of risks." Regretfully,understanding of the root cause of the current sub-prime crisis is as superficial as before.The reasons for both crises seem to be polar opposites:the Great Depression of 1929 was triggered by insufficient effective demand,while the ongoing sub-prime mortgage crisis was triggered by "excess" effective demand.In fact,however,the classic crisis and the modern crisis in the capitalist world essentially originate from the same thing:crisis of overproduction.The shift from classic crisis into modern crisis only kicks the ball from supply side to demand side.Given the intrinsic contradictions of the market economy that give rise to the crisis,the analytical framework of "risk and regulation" proves difficult to help us understand its nature.For this reason,we must turn to a Marxist questioning of the crisis.展开更多
基金Under the auspices of International Centre for China Development Studies,the University of Hong Kong
文摘The mortgage loan has evolved from a local lending instrument into a major global security and its role is unparallel to other financial instruments in the process of financial globalization. This paper explains how technology and financial innovation transformed the mortgage loan from a local security into a premier global security traded worldwide. It examines the fundamental flaws of this process and why it does not work in regards to mortgage lending and the re-securitization products that were created through financial innovation. The findings show that regulation was unable to keep pace with financial innovation, which created an environment where actors in the financial service sector were able to behave geographically irresponsibly by using information asymmetries to their advantage by par- ticipating in moral hazard activities and engaging in other immoral and unethical business practices that were centered around localized geography, which ultimately contributed to the global financial crisis. It also examines the roll of financial innovation in regard to the Lehman Brothers Mini-Bond in Hung and its role as a driving force behind China＇s newly emerging shadow banking sector. It concludes with a policy recommendation and its implication for China＇s continued economic development.
文摘The current financial crisis is an inevitable result of the financial system accommodating a new banking business model, which endeavors to benefit, with increased innovation in financial products, from the incentives and distortions created by the global macro liquidity policies. The failure of regulatory and supervising institutions to keep up with those innovations has undoubtedly compounded the magnitude of the debt and credit crisis.
文摘Since the Great Depression in 1929,economists have continued soul-searching for the lessons to be drawn from the crisis.But mainstream reflections have been misguided,conf ined to stereotypical targets of blame such as "lax regulation," "policy mistakes" and "underestimation of risks." Regretfully,understanding of the root cause of the current sub-prime crisis is as superficial as before.The reasons for both crises seem to be polar opposites:the Great Depression of 1929 was triggered by insufficient effective demand,while the ongoing sub-prime mortgage crisis was triggered by "excess" effective demand.In fact,however,the classic crisis and the modern crisis in the capitalist world essentially originate from the same thing:crisis of overproduction.The shift from classic crisis into modern crisis only kicks the ball from supply side to demand side.Given the intrinsic contradictions of the market economy that give rise to the crisis,the analytical framework of "risk and regulation" proves difficult to help us understand its nature.For this reason,we must turn to a Marxist questioning of the crisis.
