This review of the literature on the 2007–09 crisis discusses the precrisis conditions, the crisis triggers, the crisis events, the real effects, and the policy responses to the crisis. The precrisis conditions contributed to the housing price bubble and the subsequent price decline that led...

The main causes of the crisis could be ascribed to the global liquidity equilibrium, political interference in the credit market, bank credit standards, securitization and credit ratings. In order to better understand the crisis development and effects, the infectious leverage and the role of...

This paper develops a theory of financial crises that explains why crises should be expected to follow periods of sustained banking profitability. When there is some probability that outcomes are purely exogenous and some probability that they are driven by the talent/skill of the agents...

This paper explains why crises follow periods of sustained banking profitability in an environment in which there is uncertainty about whether outcomes depend on the risk management skills of banks, or are just based on luck, in the spirit of Piketty's Model (1995) of “left-wing” and...

This paper briefly reviews papers presented at a JFI-Washington University Conference on the post-crisis evolution of banks and financial markets that are appearing in a special issue of the JFI. The major themes represented by the papers in this issue have significantly advanced our...