Abstract

The book Guaranteed to Fail seems to be a useful examination of the neurotic flaws in the American financial system with a focus on the collapse of Fannie Mae and Freddie Mac. The book focuses on failure in incentives, lack of proper regulation, and the occurrence of moral hazards which had eventually led to the GFC. The teachings have special bearing for Nepal at the time when it is more or less a maneuvering through a complex economic environment. But it must be noted that the economy of Nepal faces challenges in the way of rising Non-Performing Loans and inflation and also less credit disbursement despite the presence of ample liquidity in the financial system. There seems a need for Nepal to get transformed into a market-oriented economy going in alignment with the establishment of robust regulatory frameworks in an effort to manage fiscal and monetary balance. The case of the U.S indicates that Nepal can learn to strengthen its institutional capacity to cope with external shocks, avoid duplication of existing systemic risks, and sustain the growth. This review brings out the outcome of the book and relates it to the current economic status of Nepal and comes up with shedding a light can on how we can come up with the optimum risk forbearance in the country

Keywords:

systemic risk, financial crisis, regulatory framework, economic growth, Nepal

References:

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