The Next Financial Crisis and How to Save Capitalism (Financial Institutions, Reforms, and Policies in Muslim Countries)

The financialization of the economy -- the rapid growth of the financial sector relative to the real sector and their decoupling -- has brought a number of interrelated problems which have contributed to growing income and wealth inequality. In this work, Hossein Askari and Abbas Mirakhor assert that it is time to make a bold change by putting our financial house in order and on a better path. Patchwork solutions such as higher capital requirements for banks and better regulations, supervision and enforcement are important, but at best they will only delay another inevitable financial crisis with devastating fallouts. The authors identify the prevalence of debt financing as the heart of the problem, and advocate for a fundamental reform of the financial system that reduces the supremacy of debt and increases the fraction of reserves in fractional reserve banking Cover -- Half-Title -- Title -- Copyright -- Contents -- Foreword -- Preface -- Acknowledgments -- About the Authors -- 1 The Financial Sector-In Support of Growth or Financialization? -- 2 Recurring Financial Crises-The Causes -- 3 Recurring Financial Crises-The Fallouts -- 4 Recurring Financial Crises-The Essential Reforms -- 5 Conclusions and Our Financial Future -- Bibliography -- Index Front Matter....Pages i-xii The Financial Sector—In Support of Growth or Financialization?....Pages 1-15 Recurring Financial Crises—The Causes....Pages 16-34 Recurring Financial Crises—The Fallouts....Pages 35-46 Recurring Financial Crises—The Essential Reforms....Pages 47-62 Conclusions and Our Financial Future....Pages 63-72 Back Matter....Pages 73-80