description Gary Gorton Overview
Gary B. Gorton is an American economist whose research focuses on banking, financial crises, liquidity, and the structure of financial markets. He has written influential analyses of bank runs, securitization, repurchase agreements, and the shadow-banking system, including explanations of how short-term wholesale funding contributed to the financial crisis of 2007 to 2008. His work is primarily addressed to economists, regulators, and finance professionals studying systemic risk.
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What does economist Gary Gorton research?
Gary B. Gorton is an American economist whose research focuses heavily on banking, financial crises, liquidity, and market structure. He is widely recognized for his analyses of bank runs, securitization, and the shadow banking system.
How does Gary Gorton explain the 2008 financial crisis?
Gorton attributes the 2008 financial crisis to a banking panic in the unregulated shadow banking sector, specifically involving repurchase agreements (repos). He explains that the panic was triggered by the collapse of securitized subprime mortgage values.
Where does Gary Gorton work?
Gary Gorton is a professor at the Yale School of Management. In addition to his academic work, he has consulted for various financial institutions to help them understand and mitigate systemic risks.
What is the shadow banking system according to Gary Gorton?
Gorton defines the shadow banking system as a network of non-bank financial intermediaries that provide services similar to traditional commercial banks. He focuses on how this system creates "privately produced money," like asset-backed commercial paper, which is highly vulnerable to sudden investor runs.
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