Jamshid Damooei, PhD
Accumulation of Debts and Emergence of Economic Crisis…..Continued
According to Minsky, the financial structure of a capitalist economy becomes more and more fragile during the period of prosperity.
In short, the longer the prosperity, the more fragile the system becomes.
Financial Instability Hypothesis (FIH) has the following features:
Banks and other intermediaries strive to innovate with regard to the assets they acquire and the liabilities they market. In doing so they lure investors to buy the debt by means of sophisticated innovations