Assessment of the Theories

Abstract

Chapter 2 provided a review of four prominent financial crisis theories, each of which has garnered increased attention in light of the first financial crisis of the twenty-first century. In that chapter, each theory is presented individually and in isolation from the others. The purpose of this chapter is to bring the four perspectives together and identify what they have in common and how they are different from one another. Identifying the fundamental similarities and differences between theories is important because these same theories are utilized later in the book to understand the most recent US financial crisis. If there is a framework in place in which it is clear how these theories are different as well as their similarities, it will be more obvious how to identify whether the theories are adequate for understanding modern financial crises.