Český finanční a účetní časopis 2010(2):6-17 | DOI: 10.18267/j.cfuc.63

Financial Crises and Their Responses in the Institutional Reforms: Glass-Steagall Act versus Dodd-Frank Act

Petr Musílek
Prof. Ing. Petr Musílek, Ph.D. - profesor; Katedra bankovnictví a pojišťovnictví, Fakulta financí a účetnictví, Vysoká škola ekonomická v Praze, nám. W. Churchilla 4, 130 67 Praha 3, Česká republika; <musilek@vse.cz>.

Financial crisis is a sharp, brief, ultracyclical deterioration of all or most of a group of financial indicators - illiquidity, financial insolvencies, rate of returns, asset prices, financial institutions failures, and rush out of the real or long-term financial asset into money. Financial crisis solution has two dimensions. The crisis is connected with goverment interventions to stop systematic collapse of the whole financial system. After realization of the bail-out phase, instantly starts second phase, focuses on restoring the public confidence in the financial system includes discussion and practical implementation the institutional response to the financial crisis. This paper surveys the institutional response to the Great Depression, the Great Moderation and the Global Financial Crisis. We can identify these as follows: Glass- Steagall Act, Gramm-Leach-Bliley Act and Dodd-Frank Act. There are many variants of the institutional responses to the development in economical and financial environment. Financial and Law theory indicates a wide variety of institutional responses, suggesting that is no universal ideal approach. But one aspect is clear, that Dodd-Frank Act is noGlass-Steagall Act.

Keywords: Great Depression; Glass-Steagall Act; Gramm-Leach Bliley Act; Global Financial Crisis; Dodd-Frank Act.
JEL classification: E44, G10

Published: June 1, 2010  Show citation

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Musílek, P. (2010). Financial Crises and Their Responses in the Institutional Reforms: Glass-Steagall Act versus Dodd-Frank Act. Czech Financial and Accounting Journal, 2010(2), 6-17. doi: 10.18267/j.cfuc.63
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