Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

Sending the Herd Off the Cliff Edge The Disturbing Interaction Between Herding and MarketSensitive Risk Management Practices

Sending the Herd Off the Cliff Edge The Disturbing Interaction Between Herding and... In the international financial arena, G7 policymakers chant three things more marketsensitive risk management, stronger prudential standards, and improved transparency. The message is that we do not need a new world order, but we can improve the workings of the existing one. While many believe this is an inadequate response to the financial crises of the last two decades, few argue against risk management, prudence, and transparency. Perhaps we should, especially with regards to marketsensitive risk management and transparency. The underlying idea behind this holy trinity is that it better equips markets to reward good behavior and penalize the bad, across governments and market players. However, while the market is discerning in the long run, there is now compelling evidence that in the short run, market participants find it hard to distinguish between the good and the unsustainable they herd and contagion is common. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Journal of Risk Finance Emerald Publishing

Sending the Herd Off the Cliff Edge The Disturbing Interaction Between Herding and MarketSensitive Risk Management Practices

The Journal of Risk Finance , Volume 2 (1): 7 – Apr 1, 2000

Loading next page...
 
/lp/emerald-publishing/sending-the-herd-off-the-cliff-edge-the-disturbing-interaction-between-IlV7Y3jgh9
Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
1526-5943
DOI
10.1108/eb022947
Publisher site
See Article on Publisher Site

Abstract

In the international financial arena, G7 policymakers chant three things more marketsensitive risk management, stronger prudential standards, and improved transparency. The message is that we do not need a new world order, but we can improve the workings of the existing one. While many believe this is an inadequate response to the financial crises of the last two decades, few argue against risk management, prudence, and transparency. Perhaps we should, especially with regards to marketsensitive risk management and transparency. The underlying idea behind this holy trinity is that it better equips markets to reward good behavior and penalize the bad, across governments and market players. However, while the market is discerning in the long run, there is now compelling evidence that in the short run, market participants find it hard to distinguish between the good and the unsustainable they herd and contagion is common.

Journal

The Journal of Risk FinanceEmerald Publishing

Published: Apr 1, 2000

There are no references for this article.