Gary Gorton

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About

Gary Gorton is a leading scholar in financial intermediation, banking crises, and the history of financial panics. His work fundamentally reshapes our understanding of why banks are inherently fragile and how crises recur across centuries. In his highly influential paper "Banks, Banking, and Crises" (2007), Gorton argues that despite modern financial innovations, the core vulnerabilities of banking remain unchanged. He demonstrates that the 2007–2008 subprime mortgage crisis was not a novel event but a classic banking panic—one that simply appeared in a new guise, driven by a loss of confidence in opaque, information-sensitive debt. Gorton’s research reveals how the rise of short-term repurchase agreements and structured finance created a "shadow banking system" that was as panic-prone as the old-fashioned run on deposits. His work has earned thousands of citations and profoundly influenced both academic theory and regulatory policy. A professor at Yale School of Management, Gorton is also the author of *Slapped by the Invisible Hand* and *Misunderstanding Financial Crises*, essential reading for anyone seeking to grasp the deep, recurring logic behind financial instability.