Août 2020 - Travail et coopération à travers les frontières

Financial catastrophes are sometimes more endogenous Nuclear Swans than exogenous Black Swans

By Alexis BONNET
and
Marko LEHTIMAKI
Methodology Asset Management

There are two types of financial crises: 1) Exogenous types arising first in the real economy and then transferring to the financial markets, and 2) Endogenous types arising within the financial markets themselves (and then potentially transferring to real economies depending on their severity). In the current paper we examine the nature of the endogenous financial crises, and their common origins in over-reliance on financial models, and implementation via financial derivatives.

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Financial catastrophes  are  sometimes  more endogenous Nuclear Swans than exogenous Black Swans

Alexis Bonnet
and
Marko Lehtimaki,
Methodology Asset Management

There are two types of financial crises: 1) Exogenous types arising first in the real economy and then transferring to the financial markets, and 2) Endogenous types arising within the financial markets themselves (and then potentially transferring  to  real  economies  depending  on  their severity). In the current paper we examine the nature of the endogenous financial crises, and their common origins in over-reliance on financial models, and implementation via financial derivatives.

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Retour au sommaire