The Financial Crisis - a talk by CBS Professor Jesper Rangvid
What were the consequences of the financial crisis and what major factors brought on the crisis in Denmark? And what should we be concerned about today? Answers to those big questions were central to the talk by CBS Finance professor Jesper Rangvid on September 28th at the MBA Alumni Society event.
Commissioned by the Danish government in 2013 to investigate the major causes and consequences of the financial crisis in Denmark, Jesper Rangvid has extensive knowledge about how the financial crisis played out in Denmark . “The Perfect Storm”, he called it and referred to the multiple factors that eventually contributed to the crisis such as low interest rates, new complicated financial products introduced to the market and an over-valued housing market.
Almost 10 years to the date of the financial crisis in Denmark (August 2007), the key learnings and ensuing local and global political reforms were discussed with one major key learning at the top. “I think it’s fair to say that we learned that the financial sector took on too much risk at the time and was not robust enough”, said Jesper Rangvid. Robustness and risk management were key words in the recovery of the financial sector with regulations leading the way to secure stability at a Danish, European and global level. With predictive calculations on the effect on the Danish GDP, Jesper showed the long-term effect of the crisis and how Denmark has not yet recovered fully – and potentially never will.
As for today’s concerns, Jesper had one major point, “interest rates have never been this low in 5000 years”, he said referring to a study by the Bank of England’s Chief Economist, “we should not rely on them to continue to stay this low, it is not a realistic scenario”. With this warning, the evening ended with a round of questions from the audience around disruption of the financial sector and global concerns such as China, Japan and US.