Liquidity and Crises

Financial crises have been pervasive for many years. Their frequency in recent decades has been double that of the Bretton Woods Period (1945-1971) and the Gold Standard Era (1880-1993), comparable only to the period during the Great Depression. Nevertheless, the financial crisis that started in the summer of 2007 came as a great surprise to most people. What initially was seen as difficulties in the U.S. subprime mortgage market, rapidly escalated and spilled over first to financial markets and then to the real economy. The crisis changed the financial landscape worldwide, and its full costs are yet to be evaluated.

Franklin Allen is the Nippon Life Professor of Finance and Professor of Economics at the Wharton School of the University of Pennsylvania. He has been on the faculty since 1980. He is currently Co-Director of the Wharton Financial Institutions Center. He is a past President of the American Finance Association.

Elena Carletti is Professor of Economics at the European University Institute and Joint Chair of the Economics Department and Robert Schuman Center for Advanced Studies.

Jan Pieter Krahnen is Chair of Corporate Finance at Johann Wolfgang Goethe-University Frankfurt.

Marcel Tyrell is Professor of Entrepreneurship & Finance at Zeppelin University, Friedrichshafen