A seminar entitled "Endogenous Risk" will be held at 15:30 on Monday 22 March, 2010 in Sölvhóll, the conference room of  the Central Bank of Iceland.

The seminar will be led by Jón Daníelsson, PhD, reader at the London School of Economics. 

Summary:

By incorporating endogenous risk into a standard asset-pricing model, the presentation shows banks' capacity to bear risk seemingly evaporates in the face of market turmoil, pushing the financial system further into a tailspin. It suggests that risk-sensitive prudential regulation, in the spirit of Basel II, makes systemic financial crises sharper, larger, and more costly.