Category: Finance

Displaying 28 results

Is risk rational?

Misunderstanding of risk was a major factor in the subprime crisis and ensuing recession. Andrew Lo argues that one has to look at both logical and emotional parts of the brain to grasp how people respond to financial risk.
Q & A
Behavioral Approach to Management Finance

What's the lesson of Iceland's collapse?

Iceland may have been a forerunner of 21st century financial trends. First it profited from increasing integration with the global financial system. Then ties to the world economy helped pull it into fiscal ruin. What can an island with less than .005% of the world’s population teach us about globalization?
Q & A
Global Business Finance

How did the housing bubble affect the subprime crisis?

Read an excerpt from Robert Shiller's new book, The Subprime Solution, in which he explores what the Case-Shiller Home Price Indices reveal about the housing price bubble and its role in the current financial turmoil.
Research
Finance

How does a sovereign wealth fund operate?

Sovereign wealth funds have become a source of controversy. They have the size — several trillion dollars and growing — to swing or stabilize markets. Meanwhile, their sometimes secretive strategies have invited worries that they could be used as tools of government policy. Jeffrey E. Garten, former SOM dean and former undersecretary of commerce for international trade, talked to Ng Kok Song, the managing director and group chief investment officer at the Government of Singapore Investment Corporation, about how one of the world’s largest SWFs is run.
Q & A
Finance

Did innovation cause the credit crisis?

By 2006, the subprime market had grown to 20% of the total U.S. mortgage market, and 75% of these loans were securitized and sold off to investors around the world, facilitating an influx of capital. With credit easily available, more people than ever before were able to buy homes — but then the market seized up.
Q & A
Innovation, Startups, and Venture Capital Finance

Is something new happening with private equity?

From 2005 through the middle of 2007, one public company after another was bought out and went private. The size of the deals escalated — Hertz for $15 billion, HCA for $33 billion, Equity Office Properties for $39 billion, TXU Energy for $44 billion. Then the megadeals stopped. Andrew Metrick explains what happened.
Q & A
Finance

Can markets change society?

Professor Zhiwu Chen has been watching what’s happened as China adopts such financial instruments as mortgages and mutual funds. He was born in a rural village in China, and when he goes back, he says, he sees a country that’s being remade by markets.
Q & A
Global Business Finance

What is a long life worth?

A document from 1787 Holland lists the names of girls whose income from government annuities was pooled and securitized, allowing investors to essentially bet that the girls would live a long time. Yale SOM Professors Will Goetzmann and Geert Rouwenhorst discuss how this novel financial device functioned and how it fits in the story of the development of more and more sophisticated securities.
Q & A
Finance Innovation
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