The Demise of Bank Credit C.P. Chandrasekhar and Jayati Ghosh

Growing economies generally show increasing deployment of bank credit – but in India this has been decreasing for years and recently has been almost flat. What does this suggest about the growth process and the health of the Indian economy. Bank_Credit  (Download the full text in PDF format) (This article was originally posted in the Business Line on 1 January 2018.)

Minsky’s “Cushions of Safety”, Systemic Risk and the Crisis in the US Subprime Mortgage Market Jan Kregel

The sub prime crisis in the US has little to do with the mortgage market, or subprime mortgages per se, but rather with the basic structure of the financial system that produces overestimates of creditworthiness and underpricing of risk. The bottom line is that the system has been structured to make credit too cheap, leading to excessive risk in order to provide higher returns. The financial fragility that was identified in Minsky’s work cannot be eliminated, only damped by systemic policies. However, it is possible to eliminate fragility that emerges from the structure and regulation of the financial system. mortgage_market…