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Managing Financial RisksFrom Global to Local$
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Gordon L. Clark, Adam D. Dixon, and Ashby H. B. Monk

Print publication date: 2009

Print ISBN-13: 9780199557431

Published to Oxford Scholarship Online: September 2009

DOI: 10.1093/acprof:oso/9780199557431.001.0001

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Financial Governance in the Neo-liberal Era

Financial Governance in the Neo-liberal Era

(p.48) 2 Financial Governance in the Neo-liberal Era
Managing Financial Risks

Gary Dymski

Oxford University Press

This chapter assesses the governance problems associated with the macrostructural changes that have been at work in global financial markets since the dawn of the neoliberal era — that is, since the end of the Bretton Woods era. The argument proceeds in four steps. First, the chapter identifies and elaborates on the key macrostructural changes currently ongoing in contemporary markets for finance. Second, the chapter exposits the macrostructural changes that have arisen from the shifts in financial firms' and investors' structures, strategies, and behaviours during the neoliberal era. Third, the chapter describes how the interaction of geo-economic imbalances, strategic shifts, and new financial instruments have altered the landscape of financial risk. Finally the chapter delineates the implications of these shifts for the macro governance of risk in the financial system, using the most recent global financial crisis triggered by massive defaults and arrears on subprime mortgage debt in the U.S. as a case in point. The principal assertion of this final section is this: the complex and far-reaching transformation of risk and risky behaviour implies that the macro-governance of risk must encompass a range of instruments — oversight by national and international authorities, macroeconomic stabilization policy, and emergency interventions and guidance by international financial institutions. Because of new developments in financial markets, the difficulties of identifying the locus of risk, and of intervening in contemporary financial crises to the satisfaction of all the interests involved are greater than ever before.

Keywords:   global finance, risk management, macrostructure, neoliberal era, geo-economic imbalances, strategic shifts, financial instruments

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