Ativo Capital

Rigorous Thinking

Financial and economic commentary reflecting Ativo’s world view:

Financial crises are caused by cross-border investment flows, not misbehavior, says economist Robert Aliber

Friday, October 31, 2014


Financial crises are widely believed to be caused by greed, corruption, or lack of regulation. But what if the cause is simply the variability of cross-border investment inflows? That’s the model developed by Robert Aliber, professor emeritus of international economics and finance at the University of Chicago Booth School of Business. Aliber, editor and co-author with Charles P. Kindleberger of the 1978 classic Manias, Panics, and Crashes: A History of Financial Crises, predicted the Icelandic banking crisis 18 months before it happened. In an interview with CFA Institute Magazine, Aliber offers a different view on the cause of financial crises, discusses why banking crises almost always coincide with currency crises, and explains why cross-border investment flows should be moderated.  Click here to read pdf of full interview.