Abstract
Financial crises occur more frequently in the presence of a big and unregulated financial sector, which is the essence of financialisation. Financial instability causes instability in the real economy via several channels, including funding costs, credit availability, corporate net worth, household net worth, exchange rates, confidence, and risk aversion. Financial crises tend to make consequent recessions more severe than a recession that is not associated with a financial crisis, which means that the recessions produced by financial crises are deeper and longer than otherwise. The underlying mechanism works as follows: financialisation causes financial instability, leading to financial crises and consequently to economic instability. Macroeconomic and financial stability are interconnected to the extent that the term “financial stability” is sometimes understood to cover macroeconomic stability, and vice versa.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
