Volatility, financial crises and Minsky's hypothesis

Danielsson, Jon ORCID: 0009-0006-9844-7960, Valenzuela, Marcela and Zer, Ilknur (2015) Volatility, financial crises and Minsky's hypothesis. VoxEU.

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Abstract

Does low volatility in financial markets mean that another financial crisis is more likely? And should we be worried when everything is OK? This column presents the first empirical results that find a strong validation of Minsky's hypothesis – obtained from 200 years of historical cross-sectional data – that low volatility increases the likelihood of a future financial crisis by increasing risk-taking.

Item Type:	Article
Official URL:	http://www.voxeu.org/
Additional Information:	© 2015 The Authors
Divisions:	Finance Systemic Risk Centre Financial Markets Group
Subjects:	H Social Sciences > HD Industries. Land use. Labor > HD61 Risk Management H Social Sciences > HG Finance
Date Deposited:	21 Jan 2016 17:29
Last Modified:	01 Oct 2024 03:04
URI:	http://eprints.lse.ac.uk/id/eprint/65113

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