Systemic risk, financial fragility, and crisis: A post-Keynesian analysis based on the contribution of Fernando Cardim de Carvalho

Abstract

This paper discusses the concept of systemic risk and analyses its theoretical relationship with the concepts of financial crisis and financial fragility based on the contribution of Professor Fernando Cardim de Carvalho. More specifically, it analyses Cardim’s interpretation of those concepts based on the dialogue he establishes with the conventional literature and his own interpretation of Minsky’s works. We carry out a comprehensive literature review on systemic risk, focusing on the works of Professor Cardim. The post-Keynesian approach points to an intimate connection among systemic risk, financial fragility, and systemic crisis. We highlight the endogenous nature of systemic risk in this view and the prevalence of a vertical perspective on crises, according to which they affect the economic system as a whole and not only the financial system.