Themed issue on the financial crisis

Citation

Hudson, R. (2009), "Themed issue on the financial crisis", Journal of Financial Regulation and Compliance, Vol. 17 No. 4. https://doi.org/10.1108/jfrc.2009.31117daa.001

Themed issue on the financial crisis

Article Type: Guest editorial From: Journal of Financial Regulation and Compliance, Volume 17, Issue 4

A well-known curse, said to be of Chinese origin, is “May you live in interesting times.” In financial terms, we have undoubtedly been living in interesting times. I have had the correspondingly fascinating task of putting together a themed issue on the recent financial crisis. As has become only too evident this has been the most serious world economic event for many decades and has brought the entire financial regulatory system if not indeed the fundamentals of our current approach to finance into question. It is no exaggeration to say that the crisis and the policy responses to it will shape the world economy and financial system for many years to come.

The crisis has received saturation coverage in the media which has perhaps generated more heat than light. In this issue, we have four authoritative papers that bring some deeper insights into the issues involved. The papers, taken as a whole, examine what has happened, why it happened and what the consequences will be.

The first paper by John Goddard, Phil Molyneux, and John O.S. Wilson does a real service to observers of the crisis by providing a clear and comprehensive account of how it has played out in Europe and of the resultant debate about its implications for banking regulation.

The next two papers address the causes of the grave difficulties the banking industry has faced. Robert S. Clarkson raises some fundamental questions about both the theoretical foundations and the practice of modern finance and goes on to explain how important lessons can be drawn from actuarial science and the seminal work of Adam Smith. Robert Sollis deals with the calculation and interpretation of the value at risk statistic – an issue which has been placed by many observers at the very heart of the crisis. He explains this technical subject for the statistical layman and gives a balanced and objective assessment of the advantages and disadvantages of this measure and the different approaches to its calculation.

The paper by Joanne Hindle deals with the vital practical issue of the nature of the major regulatory reforms which will inevitably emerge as a result of the crisis. She explains that regulatory intervention is likely to be both substantial and rapid. After analysing recent key papers, speeches, and articles she goes on to clearly identify the most important themes in the agenda for change.

Robert HudsonGuest Editor