Risks, Deviations from Efficiency, and Financial Regulation: A Foreword

The increasing role taken by risk management in the financial literature, and at the same time, in banking management literature, cannot be only explained by the impact that the financial crisis has had on the imbalances of financial intermediaries. The crisis has certainly led to an acceleration and intensification of a process which began some time ago, and that could indeed be inherent in the nature of credit and financial companies. Particularly, the asymmetric information theory provides many clues not only for explaining the existence and the crucial role of banks in financial markets and in the economy as a whole, but also for explaining financial fluctuations and their recurring degeneration into serious, sometimes devastating, financial crises. The causal mechanisms, triggered by an increase in the interest rate producing a positive feedback with asymmetric information, are liable to trigger cumulative processes bringing about recurring fluctuations, and under particular circumstances, financial collapse.