Small enough to fail a systems approach to financial systems reform

Small enough to fail a systems approach to financial systems reform The current issue and full text archive of this journal is available at www.emeraldinsight.com/1526-5943.htm Commentary COMMENTARY Small enough to fail: a systems approach to financial systems reform Michael Mainelli Z/Yen Group Limited, London, UK, and Bernard Manson London, UK Introduction The “Credit Scrunch” of 2007 was a systemic failure. Interactions between elements of the system (banks, rating agencies, regulators, governments, financial instruments, etc.) mattered more than the specific behaviour of a particular actor. If you believe the crisis was an apocalypse or foreshadows an apocalypse, then you should be considering fundamental reform. You want to redesign, and design principles would be handy. What might they be? Systems theory, touching on if not encompassing chaos theory and complexity theory, gives us a rich background to some simple design parameters, namely input process output, governance, monitoring, feed back and feed forward. Systems theory goes some way to explaining why financial systems, due to their large amount of feed forward (positive feed back), tend to exhibit “fat tail” outcome distributions and more instability than physical systems. Bob Giffords, the technology analyst, groups together feed back, monitoring, feed forward and governance components as “feed through”, highlighting the effect of people’s perceptions on the http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Journal of Risk Finance Emerald Publishing

Small enough to fail a systems approach to financial systems reform

The Journal of Risk Finance, Volume 12 (5): 10 – Nov 8, 2011

Loading next page...
 
/lp/emerald-publishing/small-enough-to-fail-a-systems-approach-to-financial-systems-reform-lzFS9vRo9Z
Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
1526-5943
D.O.I.
10.1108/15265941111176163
Publisher site
See Article on Publisher Site

Abstract

The current issue and full text archive of this journal is available at www.emeraldinsight.com/1526-5943.htm Commentary COMMENTARY Small enough to fail: a systems approach to financial systems reform Michael Mainelli Z/Yen Group Limited, London, UK, and Bernard Manson London, UK Introduction The “Credit Scrunch” of 2007 was a systemic failure. Interactions between elements of the system (banks, rating agencies, regulators, governments, financial instruments, etc.) mattered more than the specific behaviour of a particular actor. If you believe the crisis was an apocalypse or foreshadows an apocalypse, then you should be considering fundamental reform. You want to redesign, and design principles would be handy. What might they be? Systems theory, touching on if not encompassing chaos theory and complexity theory, gives us a rich background to some simple design parameters, namely input process output, governance, monitoring, feed back and feed forward. Systems theory goes some way to explaining why financial systems, due to their large amount of feed forward (positive feed back), tend to exhibit “fat tail” outcome distributions and more instability than physical systems. Bob Giffords, the technology analyst, groups together feed back, monitoring, feed forward and governance components as “feed through”, highlighting the effect of people’s perceptions on the

Journal

The Journal of Risk FinanceEmerald Publishing

Published: Nov 8, 2011

There are no references for this article.

You’re reading a free preview. Subscribe to read the entire article.


DeepDyve is your
personal research library

It’s your single place to instantly
discover and read the research
that matters to you.

Enjoy affordable access to
over 18 million articles from more than
15,000 peer-reviewed journals.

All for just $49/month

Explore the DeepDyve Library

Search

Query the DeepDyve database, plus search all of PubMed and Google Scholar seamlessly

Organize

Save any article or search result from DeepDyve, PubMed, and Google Scholar... all in one place.

Access

Get unlimited, online access to over 18 million full-text articles from more than 15,000 scientific journals.

Your journals are on DeepDyve

Read from thousands of the leading scholarly journals from SpringerNature, Elsevier, Wiley-Blackwell, Oxford University Press and more.

All the latest content is available, no embargo periods.

See the journals in your area

DeepDyve

Freelancer

DeepDyve

Pro

Price

FREE

$49/month
$360/year

Save searches from
Google Scholar,
PubMed

Create folders to
organize your research

Export folders, citations

Read DeepDyve articles

Abstract access only

Unlimited access to over
18 million full-text articles

Print

20 pages / month

PDF Discount

20% off