Case

Lehman Brothers and the wider US financial system, 2007–09

Illustrates the market failures approach in finance: systemic risk, moral hazard, too big to fail, shadow banking. The causal accounts compete: Acharya emphasises regulation that looks at single institutions and mispriced guarantees; Tarr emphasises political failure around the housing agencies.

Industry
Financial services
Frameworks applied
Market Failures Approach (MFA)
Clipboard with a glass checklist panel, icon for consulting

Frameworks applied

This case is read through the frameworks below.

  • Market Failures Approach (MFA)When reviewing how the firm makes its profits, which strategies should a business owner drop because they rely on market failures rather than fair competition?

Sources

References

Listed A–Z by author surname, Harvard style. A source with a DOI links to https://doi.org/…; one without links to its page or says plainly that it has no DOI.

  1. Acharya, V.V. et al. (2011) Market failures and regulatory failures: lessons from past and present financial crises. Tokyo: Asian Development Bank Institute (ADBI Working Paper 264).No DOIadb.orgSource page
  2. Acharya, V.V. (2013) Understanding financial crises: theory and evidence from the crisis of 2007-8. The NBER Reporter, 2013(1), March.No DOInber.orgSource page
  3. Financial Crisis Inquiry Commission (2011) The financial crisis inquiry report. Washington, DC: US Government Publishing Office.No DOIgovinfo.govSource page
  4. Tarr, D.G. (2010) ‘The political, regulatory, and market failures that caused the US financial crisis: what are the lessons?’, Journal of Financial Economic Policy, 2(2), pp. 163–186.doi:10.1108/17576381011070210Source page