The financial crisis of 2008 is a looming figure in current economic thinking. The global economy is still slowly recovering from the shock, and policymakers and academics continue to discuss the structural changes needed to prevent a recurrence. The stress of the last half decade has made two things very clear: A productive and innovative financial system is essential to the broader economy, but financial innovations made irresponsibly—without consideration of systemic risk and other impacts on society—can wreak havoc.
Professor Zhiwu Chen has been watching what’s happened as China adopts such financial instruments as mortgages and mutual funds. He was born in a rural village in China, and when he goes back, he says, he sees a country that’s being remade by markets.