Mark Joseph Stelzner
Throughout history, the occurrence of financial asset bubbles has led to great economic turmoil.
A bubble occurs when an asset’s price exceeds its fundamental value by a significant amount for a significant period of time. Even though this mismatch between fundamental value and price is not explained by the efficient market hypothesis, research on the formation of asset bubbles substantiates their existence. The aim of the paper is to advance the understanding of bubbles by exploring the impact of irrationality in the formation of bubbles when the participants are acting as a financial institution.
Marcin, Cammi, "Banking Institutions and the Formation of Asset Bubbles" (2019). Economics Honors Papers. 29.
The views expressed in this paper are solely those of the author.