Being written
This chapter is outlined but not yet drafted. Chapter 2 is complete and shows the format: plain-language explanations, charts drawn from the current official release, and a numbered Excel walkthrough for every figure.
Planned sections
- 1-1 Why a financial system exists — moving funds from savers to borrowers, and the two problems that get in the way
- 1-2 Direct finance and indirect finance — markets versus intermediaries
- 1-3 The cast of characters — households, firms, banks, central banks, regulators
- 1-4 Information problems — adverse selection before the deal, moral hazard after it
- 1-5 What the rest of the course does with all this
Planned charts
Chart
The size of the financial sector
Financial sector value added as a share of GDP, showing how large the business of moving money has become.
Chart
Households on both sides
Household saving rate against household debt as a share of income, over the postwar period.
Chart
Where credit comes from
Bank lending against corporate bonds outstanding — indirect finance and direct finance side by side.
Chart
The cost of a crisis
Real GDP against its pre-2008 trend, as a standing argument for why any of this matters.
Data this chapter will use
Series
- Value added by the finance and insurance industry — BEA, GDP by Industry
- Personal saving rate — BEA, National Income and Product Accounts
- Real gross domestic product — BEA, National Income and Product Accounts