Preparing for the Next Financial Crisis

Finance matters for growth (2.1). However, asset prices and credit are character-

ized by recurrent ebbs and ows–the nancial cycle–whose drivers are investi-

gated (2.2). The chapter then looks more deeply into crisis episodes and attempts

to characterize them (2.3).

2.1 Finance and growth

In his presidential address to the American Finance Association, Zingales (2015)

remarks that for most academic economists, the answer to the question “Does

nance benet society?” seems obvious. However, he also notes that this positive

feeling is not shared by society at large because of the GFC. In a long- term per-

spective, throughout history, nance has been perceived as a rent- seeking activ-

ity. But for Zingales, even the most severe critics of ...