Financial Instability and Systemic Risk : From the Global Financial Crisis and Beyond

Format:

Book

Author/Creator:

Kaszowska-Mojsa, Jagoda, author.

Series:

Routledge International Studies in Money and Banking Series

Language:

English

Physical Description:

1 online resource

Edition:

1st ed.

Place of Publication:

2026.

Oxford, GB : Routledge, 2026

Summary:

The Global Financial Crisis revealed that systemic fragility arises not only from identifiable risks but also from systemic uncertainty - the endogenous and often unpredictable dynamics that build up within financial systems and amplify across time and space. More than a decade later, this dual challenge remains pressing as the rising inequality and geopolitical insecurity have underscored the vulnerability of interconnected economies and societies.This book illustrates how agent-based modelling (ABM) can enrich the study of crises, systemic risk and uncertainty, and the distributional effects of policies that are designed to contain them. Rather than treating crises as external shocks, the book highlights how fragility can emerge endogenously within economies that are understood as complex, evolving systems. Through clear explanations and targeted applications, it not only demonstrates how ABM can capture the effects of macroprudential regulation on the real economy and inequality and shed light on moments of financial instability but also provides a practical guide to building such data-driven models in the first place. At the same time, it situates these insights within a broader discussion of contagion, procyclicality and global financial regulation, thus connecting the modelling results with ongoing debates on how best to safeguard financial stability. Further, it offers a valuable synthesis of lessons learned from advanced economies, illustrating how institutional design and macroprudential policy can strengthen financial resilience while also generating significant redistributive effects across sectors and households.The book is primarily aimed at an academic audience of scholars and advanced students in economics, finance and computational social science. It will also appeal to professionals in central banks, regulators and policymakers engaged in designing and evaluating macroprudential frameworks.The Open Access version of this book, available at http://www.taylorfrancis.com, has been made available under a Creative Commons Attribution-Non Commercial-No Derivatives (CC BY-NC-ND) 4.0 license.

Contents:

Cover

Half Title

Series Page

Title Page

Copyright Page

Contents

Preface

Introduction

PART I: Systemic Risk and the Global Financial Crisis (GFC)

1. Defining Systemic Risk and Uncertainty - Nature, Measurement and Modelling

1.1. Risk and Uncertainty

1.1.1. Knight's Risk and Uncertainty

1.1.2. Perceptions and Reinterpretations of Knight's Ideas

1.1.3. Risk and Uncertainty in General Equilibrium Framework

1.2. The Concept and the Nature of Systemic Risk

1.2.1. Understanding the Endogenous and Exogenous Nature of Systemic Risk

1.2.2. The Spatial and Temporal Dimensions of Systemic Risk

1.2.3. Understanding Procyclicality and Contagion in Financial Systems

1.3. The Measurement and Modelling of Systemic Risk

1.3.1. Contrasting Mainstream and Heterodox Approaches

1.3.2. Measurement Techniques in the Analysis of Systemic Risk

1.3.3. The Modelling of Systemic Risk

Final remarks

2. Systemic Risk and the 2008-2009 U.S. Financial Crisis: Causes, Course and Consequences

2.1. System Vulnerabilities and Triggers of the Financial Crisis in the United States

2.1.1. The Deregulation Process and Affordable Housing Policies in the United States

2.1.2. The Macroeconomic Causes of the U.S. Crisis and Policy Responses

2.1.3. The Build-Up of Systemic Risk Before the U.S. Financial Crisis

2.2. Financial Crisis Management and Reforms in the United States

2.2.1. The Phases of the U.S. Financial Crisis

2.2.2. Systemic Risk in the Course of the Financial Crisis in the United States

2.2.3. Policy and Regulatory Response in the United States

2.3. Consequences of the Financial Crisis in the United States

2.3.1. Impact on the U.S. Financial System and Systemic Risk

2.3.2. Impact on the Real Economy and Distributional Effects in the United States.

2.3.3. Impact on the World Economy and European Contagion

2.4. The Central Role of Systemic Risk in the Course and Effects of the U.S. Financial Crisis

3. The Role of Systemic Risk and Uncertainty in the Development of the EU Crisis

3.1. Systemic Risk in the PIIGS Economies

3.1.1. Spain

3.1.2. Greece

3.1.3. Ireland

3.2. Systemic Risk in the Scandinavian, Baltic and Central and Eastern European Countries

3.2.1. The Banking Crisis of the 1990s in Scandinavian Countries

3.2.2. Lessons from the 1990s and the Crisis of 2009 in the Scandinavian Countries

3.2.3. The Crisis in the Baltic States

3.2.4. The Crisis in the Central and Eastern European Countries

3.3. Systemic Risk in the EU Core Countries

3.4. Systemic Risk in Great Britain

3.5. Assessing the Relative Role of Systemic Risk in Explaining the Crisis in the European Union Countries

PART II: Macroprudential Policies After the Global Financial Crisis (GFC)

4. Systemic Risk Mitigation Through Regulation and Macroprudential Policies

4.1. Post-Crisis Institutional and Regulatory Changes

4.1.1. Provisions of the de Larosière Report

4.1.2. Institutional and Regulatory Changes After the de Larosière Report

4.1.3. A Closer Look at the Implementation of Basel III and IV in the EU Through the CRR/CRD Frameworks

4.2. Macroprudential Policies

4.2.1. The Theory of Macroprudential Policies

4.2.2. The ESRB's Objectives and Macroprudential Instruments in the EU

4.2.3. Experience with Macroprudential Policies in the EU Countries

4.2.4. Effectiveness of Macroprudential Policies

5. Analysing the Effects of Macroprudential Policies Through an Agent-Based Model with Heterogeneous Agents

5.1. Analysis of the Tools for Studying the Effects of Macroprudential Policy on Social Welfare and Inequality.

5.1.1. The Impact of Macroprudential Policies on Welfare Within the DSGE Approach

5.1.2. The Impact of Macroprudential Policies on Inequality and Data-Driven Models

5.1.3. The Impact of Macroprudential Policies on Welfare and Inequality Within the ABM Approach

5.2. Comparison of the ABM and DSGE-3D Model

5.3. Model Description

5.4. Inequality Measures and Distributional Effects

5.4.1. Distributions, Inequality and Concentration Measures

5.4.2. Gini Coefficient and Measures of Asymmetry

5.4.3. Spatial Dimensions of Inequality and Inequality Aversion

5.4.4. Indebtedness of Households and Macroprudential Ratios

5.5. Results of the Simulations

5.5.1. Minsky Moment

5.5.2. Simulating an Unstable Economy

5.5.3. Optimality of Macroprudential Policy Stance

Final Remarks

Conclusions

A. The Bewley's Theorems

B. A General-Equilibrium Framework for Macroprudential Analysis

B.1. Technology, Preferences and Constraints

B.2. Equilibrium

B.3. Wedges and their Interpretation

B.4. Planner's Problem and Targeting Conditions

B.5. Implementing Optimal Macroprudential Policy

B.6. Time Consistency and Sequential Policy

B.7. Pecuniary Externalities and Borrowing Constraints

B.8. From Wedges to Instruments

B.9. Generic Need for Macroprudential Intervention

B.10. Systemic Risk and Uncertainty

C. The Data-Driven Agent-Based Model

C.1. Initialisation of a Data-Driven Agent-Based Model

C.1.1. Household Finance and Consumer Survey Data - Data Mapping

C.1.2. Reports on Revenues, Costs and Financial Results as well as the Expenditures on Fixed Assets - Data Mapping

C.2. Individuals and Households Within the Model

C.2.1. Marginal Distributions of Individual Characteristics

C.2.2. Population Dynamics

C.2.3. Labour Market Dynamics

C.2.4. Consumption, Savings and Consumer Loans.

C.2.5. Investments on the Housing Market and Mortgages

C.2.6. Inter-Generational Transfer of Wealth

C.3. Sectors, Firms and Establishments in the Model

C.3.1. Entrepreneurial Spirit

C.3.2. Firm Demography and Growth

C.3.3. Production and Sales of Establishments

C.4. Public Sector

C.5. The Banking System in the Model

C.5.1. Money Creation and the Role of Commercial Banks Within Our Model

C.5.2. Bank Lending and the Deposits

C.5.3. Profitability, Solvency and Liquidity of Banks

C.5.4. Interest Rates of Banks

C.5.5. Supply of Credit

D. Tables and Figures

D.1. Variables in the Model

D.2. Sequential Updating of States in the Model

Bibliography

Index.

Notes:

OCLC-licensed vendor bibliographic record.

Description based on publisher supplied metadata and other sources.

ISBN:

1-04-087029-5

1-04-087020-1

1-003-74895-3

OCLC:

1581196707