Chapter 5

Bubbles, Panics, Crashes, and Crises


A perspective on financial bubbles, panics, crashes and crises is important for understanding the history of financial regulation and risks posed by financial products and markets. The Great Depression, Global Financial Crisis and the DotCom Crash of 2000 are discussed. Bubbles are defined as a rapid escalation in asset prices in excess of perceived valuations run-up and crash phases of crises are discussed. Opinions differ as to whether there is a bubble in Bitcoin. Fintech risks exist in marketplace lending, securitizations, cryptocurrencies, and high prices for Fintech equity. But Fintech also offers the potential for reducing risks by the application of artficial intelligence (AI) and ...

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