nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2011‒02‒05
three papers chosen by
Karl Petrick
University of the West Indies

  1. The Socialization of Financial Risk in Neoliberal Mexico By Thomas Marois
  2. The Role of Banks in the Korean Financial Crisis of 1997: An Interpretation Based on the Financial Instability Hypothesis By Juan Pablo Painceira
  3. "Shooting the Messenger?" The Impact of Short Sale Bans in Times of Crisis By Ian Appel and Caroline Fohlin

  1. By: Thomas Marois
    Abstract: Mexico has experienced several financial crises since the 1980s, notably in 1982, 1994-95, and 2008-09. In each case of crisis, the stability of capitalist development and its evolving neoliberal form has depended on the socialization of financial risks. I argue this is when the government and financial state managers can coordinate a response to financial crisis institutionally premised on drawing the worst financial risks into the state to diffuse the costs of risk onto society at large. Few approaches to finance and development have internalized socialization into their understandings of neoliberalism, whereas here the socialization of financial risk is shown as not only class-based but as also necessary and constitutive of the current phase of finance-led neoliberalism.
    Date: 2011
  2. By: Juan Pablo Painceira
    Date: 2010
  3. By: Ian Appel and Caroline Fohlin
    Abstract: We find that the bans on covered short sales, implemented in several countries during the financial crisis of 2008-09 improved market liquidity or at least had a neutral impact; a result we argue could be expected in theory, given a simple variation on the Diamond-Verrechia (1987) model. The result holds for daily data over an extended period as well as for intraday data over various time spans. In contrast to other recent studies, we use American Depository Receipts as the controls in a difference-in-difference analysis encompassing all banned non-U.S. shares with corresponding depository receipts listed in the United States. Furthermore, we find that bans on covered short sales generally succeeded in lowering volatility. Banning short selling is not good policy in normal times, but our findings indicate that such bans might prove useful in (temporarily) stemming liquidity loss during crises.
    Date: 2010–10

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