Linked e-resources
Details
Table of Contents
Cover; Bubbles and Contagion in Financial Markets, Volume 1; Contents; List of Tables and Figures; Preface; Acknowledgments; List of Acronyms; 1 Introduction to Bubbles and Contagion; 1.1. Current situation; 1.2. Definitions; 1.2.1. Contagion definition; 1.2.2. Bubble definition; 1.3. Brief history and analysis of some bubbles; 1.3.1. Tulip Mania; 1.3.2. South Sea Bubble (1719-1720); 1.3.3. Railway Mania; 1.3.4. Dot-com Bubble; 1.3.5. The housing bubble; 1.4. Causes of bubbles and contagion; 1.4.1. Conditions; 1.4.2. Bounded rationality; 1.4.3. The financial accelerator; 1.4.4. Herding.
1.4.5. Trade linkages1.4.6. Financial linkages; 1.5. The life cycle of a bubble; 1.5.1. Phases of a bubble's life cycle; 1.5.2. Resulting misallocations; 1.5.3. Balance-sheet recession; 2 Macro "Players" in Bubble Formation and Contagion Processes; 2.1. Monetary and fiscal policy; 2.2. Credit, global flows, and the repricing of risk; 2.3. Connectivity, systemic risk sharing, and transmission mechanisms; 2.3.1. Connectivity and exposures; 2.3.2. The financial accelerator's role in the transmission of crises; 2.3.3. Economic instability and financial risk.
2.3.4. Systemic risk and transmission mechanisms2.3.4.1. Creditor/depositor runs; 2.3.4.2. Information-induced bank runs; 2.3.4.3. Collateral/margin runs; 2.3.4.4. Loss spiral; 2.3.4.5. Margin/haircut or leverage spiral; 2.3.4.6. Contagion and flight to safety; 2.3.4.7. Lenders' limitations; 2.3.4.8. Network externalities; 2.3.4.9. Feedback effects between financial sector risk and sovereign risk; 3 Contributors to the Bubble Formation and Contagion Process; 3.1. Market imperfections; 3.2. Asymmetric information; 3.2.1. Improved stock liquidity; 3.2.2. Reduced cost of capital.
3.2.3. Increased information intermediation3.3. Self-fulfilling expectations and reflexivity; 3.3.1. Reflexive relations; 3.3.2. Feedback, collective behaviors, and herding; 3.4. Executive compensation and bad incentives; 3.5. Speculative trading; 3.6. Aspects of behavioral finance; 3.6.1. Rational choice and bounded rationality; 3.6.2. A dual-system theory: intuition and accessibility; 3.6.3. Framing effects; 3.6.4. Attribute substitution: a model of judgment by heuristic principles; 3.6.5. Changes or states: standard utility versus Prospect Theory.
3.6.6. Applying behavioral economics to financial markets1433.6.6.1. Preferences; 3.6.6.2. Beliefs; 3.6.6.3. Decision-making process; 3.7. Biases, strategies, competition, market failures, policy, and regulation; 3.7.1. Information asymmetries; 3.7.2. Externalities and cross-subsidies; 3.7.3. Root causes and remedies for problems; 3.7.4. Practical challenges for interventions; 4 Bubbles versus the Valuation of Fundamentals; 4.1. The role of "expectations"; 4.2. Detecting bubbles; 4.3. Fundamentals of valuation; 4.3.1. Accounting value; 4.3.2. Discounted cash flow value; 4.3.3. Residual value.
1.4.5. Trade linkages1.4.6. Financial linkages; 1.5. The life cycle of a bubble; 1.5.1. Phases of a bubble's life cycle; 1.5.2. Resulting misallocations; 1.5.3. Balance-sheet recession; 2 Macro "Players" in Bubble Formation and Contagion Processes; 2.1. Monetary and fiscal policy; 2.2. Credit, global flows, and the repricing of risk; 2.3. Connectivity, systemic risk sharing, and transmission mechanisms; 2.3.1. Connectivity and exposures; 2.3.2. The financial accelerator's role in the transmission of crises; 2.3.3. Economic instability and financial risk.
2.3.4. Systemic risk and transmission mechanisms2.3.4.1. Creditor/depositor runs; 2.3.4.2. Information-induced bank runs; 2.3.4.3. Collateral/margin runs; 2.3.4.4. Loss spiral; 2.3.4.5. Margin/haircut or leverage spiral; 2.3.4.6. Contagion and flight to safety; 2.3.4.7. Lenders' limitations; 2.3.4.8. Network externalities; 2.3.4.9. Feedback effects between financial sector risk and sovereign risk; 3 Contributors to the Bubble Formation and Contagion Process; 3.1. Market imperfections; 3.2. Asymmetric information; 3.2.1. Improved stock liquidity; 3.2.2. Reduced cost of capital.
3.2.3. Increased information intermediation3.3. Self-fulfilling expectations and reflexivity; 3.3.1. Reflexive relations; 3.3.2. Feedback, collective behaviors, and herding; 3.4. Executive compensation and bad incentives; 3.5. Speculative trading; 3.6. Aspects of behavioral finance; 3.6.1. Rational choice and bounded rationality; 3.6.2. A dual-system theory: intuition and accessibility; 3.6.3. Framing effects; 3.6.4. Attribute substitution: a model of judgment by heuristic principles; 3.6.5. Changes or states: standard utility versus Prospect Theory.
3.6.6. Applying behavioral economics to financial markets1433.6.6.1. Preferences; 3.6.6.2. Beliefs; 3.6.6.3. Decision-making process; 3.7. Biases, strategies, competition, market failures, policy, and regulation; 3.7.1. Information asymmetries; 3.7.2. Externalities and cross-subsidies; 3.7.3. Root causes and remedies for problems; 3.7.4. Practical challenges for interventions; 4 Bubbles versus the Valuation of Fundamentals; 4.1. The role of "expectations"; 4.2. Detecting bubbles; 4.3. Fundamentals of valuation; 4.3.1. Accounting value; 4.3.2. Discounted cash flow value; 4.3.3. Residual value.