Dodd Frank Essay
Behavioral Economics & Dodd-Frank:
A Behavioral Analysis of the Financial Crisis in the U.S.
& Subsequent Reforms in the Dodd-Frank Act
Taylor A. Marr: s0547755
MA in International & Development Economics (MIDE)
HTW – University of Applied Sciences: Berlin
Master’s Thesis: Word count (main content only): 10,497; Word count total: 15,290
First Supervisor: Prof. Dr. Dullien
Second Supervisor: Prof. Dr. Joebges
July 6, 2015 Table of Contents
Abstract 4
List of Abbreviations 5
I. Introduction 7
II. Behavioral Finance, the Crisis, & Reform 10
A. Behavioral Finance 10
B. Behavioral Factors in the Financial Crisis 12
C. The Dodd-Frank Act 17
III. Macro-Prudential Regulation 22
A. Systemic Risk & Dodd-Frank 22
B. The Credit Cycle 24
C. Asset Bubbles 25 …show more content…
Therefore, the next section will provide an introduction to behavioral finance, an explanation of the behavioral factors present in the global financial crisis of 2007-2009, and then a general overview of the Dodd-Frank Act’s notable reforms. Then, the rest of this paper considers the behavioral causes of the crisis from the literature of behavioral finance and economics in analyzing if the macro, meso, and micro reforms of the Dodd-Frank Act address these findings. The third section assesses the macro-prudential reforms of the Dodd-Frank Act to evaluate the effectiveness of reducing the speculative nature of bubbles. Next, section four provides a description of the common biases that regulators are found to be susceptible to and evaluates the regulatory changes made in the Act as well. Then, the fifth section explains the micro-oriented reforms to consumer protection that focus on addressing the fraudulent and predatory lending practices leading up to the crisis. The final section of this paper will conclude with a summary of the main findings in relation to the research
A Behavioral Analysis of the Financial Crisis in the U.S.
& Subsequent Reforms in the Dodd-Frank Act
Taylor A. Marr: s0547755
MA in International & Development Economics (MIDE)
HTW – University of Applied Sciences: Berlin
Master’s Thesis: Word count (main content only): 10,497; Word count total: 15,290
First Supervisor: Prof. Dr. Dullien
Second Supervisor: Prof. Dr. Joebges
July 6, 2015 Table of Contents
Abstract 4
List of Abbreviations 5
I. Introduction 7
II. Behavioral Finance, the Crisis, & Reform 10
A. Behavioral Finance 10
B. Behavioral Factors in the Financial Crisis 12
C. The Dodd-Frank Act 17
III. Macro-Prudential Regulation 22
A. Systemic Risk & Dodd-Frank 22
B. The Credit Cycle 24
C. Asset Bubbles 25 …show more content…
Therefore, the next section will provide an introduction to behavioral finance, an explanation of the behavioral factors present in the global financial crisis of 2007-2009, and then a general overview of the Dodd-Frank Act’s notable reforms. Then, the rest of this paper considers the behavioral causes of the crisis from the literature of behavioral finance and economics in analyzing if the macro, meso, and micro reforms of the Dodd-Frank Act address these findings. The third section assesses the macro-prudential reforms of the Dodd-Frank Act to evaluate the effectiveness of reducing the speculative nature of bubbles. Next, section four provides a description of the common biases that regulators are found to be susceptible to and evaluates the regulatory changes made in the Act as well. Then, the fifth section explains the micro-oriented reforms to consumer protection that focus on addressing the fraudulent and predatory lending practices leading up to the crisis. The final section of this paper will conclude with a summary of the main findings in relation to the research