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Systemic risk

Index Systemic risk

In finance, systemic risk is the risk of collapse of an entire financial system or entire market, as opposed to risk associated with any one individual entity, group or component of a system, that can be contained therein without harming the entire system. [1]

41 relations: Bank run, Beta (finance), Cascading failure, Central bank, Cost engineering, Diversification (finance), Endogenous risk, Finance, Financial crisis, Financial crisis of 2007–2008, Financial regulation, Financial risk modeling, Flight-to-quality, Fractional-reserve banking, Glass–Steagall legislation, Global financial system, Gross domestic product, Hedge fund, Herfindahl index, Internal contradictions of capital accumulation, Internet Archive, Jörg Guido Hülsmann, London School of Economics, Macroprudential regulation, Market liquidity, Market risk, Modern portfolio theory, Monetary economics, Moral hazard, Paolo Tasca, Project management, Risk, Security (finance), Subprime mortgage crisis, Systematic risk, Systemic Risk Centre, Systemically important financial institution, Taleb distribution, Too big to fail, Too connected to fail, U.S. Securities and Exchange Commission.

Bank run

A bank run (also known as a run on the bank) occurs when a large number of people withdraw their money from a bank, because they believe the bank may cease to function in the near future.

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Beta (finance)

In finance, the beta (β or beta coefficient) of an investment indicates whether the investment is more or less volatile than the market as a whole.

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Cascading failure

A cascading failure is a process in a system of interconnected parts in which the failure of one or few parts can trigger the failure of other parts and so on.

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Central bank

A central bank, reserve bank, or monetary authority is an institution that manages a state's currency, money supply, and interest rates.

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Cost engineering

Cost engineering is "the engineering practice devoted to the management of project cost, involving such activities as estimating, cost control, cost forecasting, investment appraisal and risk analysis." "Cost Engineers budget, plan and monitor investment projects.

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Diversification (finance)

In finance, diversification is the process of allocating capital in a way that reduces the exposure to any one particular asset or risk.

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Endogenous risk

Endogenous risk is a type of Financial risk that is created by the interaction of market participants.

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Finance is a field that is concerned with the allocation (investment) of assets and liabilities (known as elements of the balance statement) over space and time, often under conditions of risk or uncertainty.

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Financial crisis

A financial crisis is any of a broad variety of situations in which some financial assets suddenly lose a large part of their nominal value.

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Financial crisis of 2007–2008

The financial crisis of 2007–2008, also known as the global financial crisis and the 2008 financial crisis, is considered by many economists to have been the worst financial crisis since the Great Depression of the 1930s.

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Financial regulation

Financial regulation is a form of regulation or supervision, which subjects financial institutions to certain requirements, restrictions and guidelines, aiming to maintain the integrity of the financial system.

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Financial risk modeling

Financial risk modeling refers to the use of formal econometric techniques to determine the aggregate risk in a financial portfolio.

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A flight-to-quality, or flight-to-safety, is a financial market phenomenon occurring when investors sell what they perceive to be higher-risk investments and purchase safer investments, such as US Treasuries or gold.

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Fractional-reserve banking

Fractional-reserve banking is the practice whereby a bank accepts deposits, makes loans or investments, but is required to hold reserves equal to only a fraction of its deposit liabilities.

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Glass–Steagall legislation

The Glass–Steagall legislation describes four provisions of the U.S.A Banking Act of 1933 separating commercial and investment banking.

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Global financial system

The global financial system is the worldwide framework of legal agreements, institutions, and both formal and informal economic actors that together facilitate international flows of financial capital for purposes of investment and trade financing.

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Gross domestic product

Gross domestic product (GDP) is a monetary measure of the market value of all final goods and services produced in a period (quarterly or yearly) of time.

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Hedge fund

A hedge fund is an investment fund that pools capital from accredited individuals or institutional investors and invests in a variety of assets, often with complex portfolio-construction and risk-management techniques.

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Herfindahl index

The Herfindahl index (also known as Herfindahl–Hirschman Index, HHI, or sometimes HHI-score) is a measure of the size of firms in relation to the industry and an indicator of the amount of competition among them.

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Internal contradictions of capital accumulation

The internal contradictions of capital accumulation constitute an essential concept of crisis theory, which is associated with Marxist economic theory; and while the same phenomenon is described in neoclassical economic theory, in that literature it is referred to as systemic risk.

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Internet Archive

The Internet Archive is a San Francisco–based nonprofit digital library with the stated mission of "universal access to all knowledge." It provides free public access to collections of digitized materials, including websites, software applications/games, music, movies/videos, moving images, and nearly three million public-domain books.

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Jörg Guido Hülsmann

Jörg Guido Hülsmann is a German-born economist of the Austrian School of economics who studies issues related to money, banking, monetary policy, macroeconomics, and financial markets.

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London School of Economics

The London School of Economics (officially The London School of Economics and Political Science, often referred to as LSE) is a public research university located in London, England and a constituent college of the federal University of London.

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Macroprudential regulation

Macroprudential regulation is the approach to financial regulation that aims to mitigate risk to the financial system as a whole (or "systemic risk").

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Market liquidity

In business, economics or investment, market liquidity is a market's feature whereby an individual or firm can quickly purchase or sell an asset without causing a drastic change in the asset's price.

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Market risk

Market risk is the risk of losses in positions arising from movements in market prices.

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Modern portfolio theory

Modern portfolio theory (MPT), or mean-variance analysis, is a mathematical framework for assembling a portfolio of assets such that the expected return is maximized for a given level of risk.

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Monetary economics

Monetary economics is a branch of economics that provides a framework for analyzing money in its functions as a medium of exchange, store of value, and unit of account.

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Moral hazard

In economics, moral hazard occurs when someone increases their exposure to risk when insured.

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Paolo Tasca

Paolo Tasca (born 1976) is an Italian economist, researcher, public speaker, author and advisor.

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Project management

Project management is the practice of initiating, planning, executing, controlling, and closing the work of a team to achieve specific goals and meet specific success criteria at the specified time.

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Risk is the potential of gaining or losing something of value.

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Security (finance)

A security is a tradable financial asset.

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Subprime mortgage crisis

The United States subprime mortgage crisis was a nationwide banking emergency, occurring between 2007 and 2010, that contributed to the U.S. recession of December 2007 – June 2009.

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Systematic risk

In finance and economics, systematic risk (in economics often called aggregate risk or undiversifiable risk) is vulnerability to events which affect aggregate outcomes such as broad market returns, total economy-wide resource holdings, or aggregate income.

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Systemic Risk Centre

The Systemic Risk Centre (SRC) is a research centre in London, hosted at the London School of Economics and dedicated to the study of systemic risk and the development of policies for addressing the effects of financial crises.

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Systemically important financial institution

A systemically important financial institution (SIFI) or systemically important bank (SIB) is a bank, insurance company, or other financial institution whose failure might trigger a financial crisis.

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Taleb distribution

In economics and finance, a Taleb distribution is the statistical profile of an investment which normally provides a payoff of small positive returns, while carrying a small but significant risk of catastrophic losses.

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Too big to fail

The "too big to fail" theory asserts that certain corporations, particularly financial institutions, are so large and so interconnected that their failure would be disastrous to the greater economic system, and that they therefore must be supported by government when they face potential failure.

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Too connected to fail

The "too connected to fail" (TCTF) concept refers to a financial institution which is so connected to other institutions that its failure would probably lead to a huge turnover in the whole system.

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U.S. Securities and Exchange Commission

The U.S. Securities and Exchange Commission (SEC) is an independent agency of the United States federal government.

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[1] https://en.wikipedia.org/wiki/Systemic_risk

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