Free

Causes of the 2007-08 Financial Crisis - Essay Example

Comments (0) Cite this document
Summary
The effect that real estate has on the economy of a country proves that it is important to the economy and has a direct effect of the performance of the economy of a country. Real estate industry is also hit quite hard when the economy is not doing well. The subprime mortgage…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER95.2% of users find it useful
Causes of the 2007-08 Financial Crisis
Read TextPreview

Extract of sample "Causes of the 2007-08 Financial Crisis"

Causes for the 2007-08 Financial Crisis Deema Hamad almana 01651 ENGL 203 Dr, Tobias Christopher lee Qatar The effect that real e has on the economy of a country proves that it is important to the economy and has a direct effect of the performance of the economy of a country. Real estate industry is also hit quite hard when the economy is not doing well. The subprime mortgage crisis only served to prove this fact the more. The crisis came about due to imprudent and excessive lending by the banks (Chapra, M., 2009). The crisis came about in a chain reaction that started with the mixing of subprime and prime debt and passing the entire risk to the ultimate purchaser. Due to this the mortgage originators had lesser incentive to motivate them to take careful underwritings (Chapra, M., 2009). The economy of the real estate industry was affected seriously by the step. With these kinds of effects that the real estate industry had on the economy of the world, it is quite evident that real estate industry is an economic to reckon.
More attention was accorded to loan volumes rather than loan quality as banks fought to increase their investment opportunities hoping to maximize their profits as a result of the economic crunch (Torres, 2010). In Greece alone, investors became reluctant to do business or even finance the Government deficits (Torres, 2010). With the decline in the confidence in government, falling by around 10% in many countries, it became very evident that the masses were discontent with the short term measures that were being taken by governments to try and solve the situation (Torres, 2010). The effects of the meltdown were felt quite deep down the social ladder. Starting at the top with the banks not trusting one another and the interbank credit being anemic, the unequal economic incomes affected the wage growth in countries where it would have been justified by the productivity development.
References
Chapra, M. (2009). The Global Financial Crisis Can Islamic Finance Help? INSIGHTS ,1, 27-38.
Torres, R. (2011). Global crisis: causes responses and challenges. Responding to the global Crisis: Achievements and pending issue. United States, Washington: international labour office,Inc Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Causes of the 2007-08 Financial Crisis Essay Example | Topics and Well Written Essays - 250 words”, n.d.)
Retrieved from https://studentshare.org/english/1647220-causes-of-the-2007-08-financial-crisis
(Causes of the 2007-08 Financial Crisis Essay Example | Topics and Well Written Essays - 250 Words)
https://studentshare.org/english/1647220-causes-of-the-2007-08-financial-crisis.
“Causes of the 2007-08 Financial Crisis Essay Example | Topics and Well Written Essays - 250 Words”, n.d. https://studentshare.org/english/1647220-causes-of-the-2007-08-financial-crisis.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Causes of the 2007-08 Financial Crisis

Financial Crisis of 2007-2009

...and the economies observed stability. Officially, it came under announcement by the US officials in the first half of 2010 that the crises have marked an end. The business and financial communities started to rise and the capital that was lost during the crisis was recovering. The factors that caused the recession to occur came under usage in order to curb the recession. This was something felt absurd by the corporations and financial institutions but as they were implemented with proper planning and modifications in the ways to carry out those activities, they proved to be successful in many ways (Friedman & Posner, pp.150-250). Works Cited Cline, William, R....
5 Pages(1250 words)Essay

The Financial Crisis of 2007

.... In this regard, it becomes essential to get insights about the major triggers behind financial crisis so as to develop some individual backup plans in order to survive in the times of recessions and financial crisis. For each individual, it is imperative to understand the basic criteria of spending and investment during the times of recession. Subsequent paragraphs expansively provide insights about the major triggers behind global financial crisis and events that led to these crises. Major Triggers Behind Global Financial Crisis 2007 The major reason behind the occurrence of global...
7 Pages(1750 words)Research Paper

2007 financial crisis

...? What happened in the 2007 financial crisis? Through asymmetric information hence adverse selection, the 2007 financial crisis was caused by the action and inaction by the government (Lounsbury 2010), which created a platform over which both banks, and bank-like institution taking excessive risks specifically in the mortgage backed security market (BBC News 2009). The risks kept building up and through the synergistic effect; they interconnected among the institutions, which in the end undermined the stability of the financial institutions. There were seven main causes that worked together to cause the 2007 financial crisis. Such included the securitization of the mortgages bringing forth to the rise in the shadow banking sector... ,...
5 Pages(1250 words)Essay

Financial crisis 2007-2012

...securities at the time of financing the loans. This led to erosion of value of the company and the shareholders which eventually led to financial crisis of 2007-2012. The underlying causes of financial crisis were not reflected in the information flow to the investors that led to bad investments (Palan, 2007, p.25). This establishes the redundancy of efficient markets in explaining the financial decisions. Financial theories and models This part of the study will evaluate several aspects of Efficient Market Hypothesis and Random market Hypothesis. Efficient Market Hypothesis Efficient...
4 Pages(1000 words)Essay

What Lessons can be learned from the Global Financial Crisis of 2007-08, About the Effectiveness of the Transmission Mechanism of Monetary Policy

...?What Lessons can be learned from the Global Financial Crisis of 2007-08, About the Effectiveness of the Transmission Mechanism of Monetary Policy? Table of Contents Introduction 3 The Transmission Mechanism of Monetary Policies 4 Causes and Consequences of Global Crisis 7 Lesson Learned 10 References 12 Bibliography 16 Appendix 17 Introduction The global financial crisis, which occurred during the year 2007-2008, has been recognised as one of the worst crises ever faced by the word economy. The crisis has adversely affected the financial as well as...
10 Pages(2500 words)Assignment

Impact of the Global Financial Crisis of 2007/2008 on the Qatari Economy

... Introduction Literature states that global financial crisis had occurred during 2007-08 when the financial institutions and the financial system as a whole had collapsed. The causes for this crisis had started well before 2007. It has been established that reckless lending by the banks before 2007, in the form of mortgages, had led to the formation of a housing bubble (Lewis, “The Global Financial Crisis, 2007-08: Origins, Nature and Consequences”). The epicenter of this financial crisis originated in the developed economies and not in the developing ones (Obstfeld, Cho and Mason 230). The crisis in the recent times has been characterized by the failure of the major banks and their subsequent bailouts by the national governments... by the...
10 Pages(2500 words)Research Paper

2007-2009 Financial Crisis

.... It is seen that hundreds of people working in different fields lost their works during the crisis, and it resulted in poor economic growth. Shi and Singh (2011) pointed out that, “During the 2007-2009 recession, the unemployment rate in the United States topped 10 %, the highest it had been in the 26 years” (p. 545). So, the crisis has made unemployment worse for many people as it has become more difficult to find a new job. To be specific, many companies have been reluctant to hire any new people. The financial crisis caused to decline in international trade, and finally led the nation towards unemployment. At the same time,...
1 Pages(250 words)Essay

Financial Crisis 2007-09

...The Financial Meltdown What were the substantive causes of the 2007-2009 cataclysmic financial meltdown? The substantive cause ofthe 2007-2009 cataclysmic financial meltdown resulted from the boom in real estate prices. The crisis began with fall of subprime residential market in the U.S. Other causes include global financial imbalances, creation of riskier financial instruments and fall in interest rates. 2. Any other factors exacerbating the financial collapse? The financial collapse was worsened by the...
1 Pages(250 words)Case Study

Causes for the 2007-08 Financial Crisis

...Causes of the 2007-08 Financial Crisis Major: Economics Research question: What are the fundamental factors which led to the 2007-2008 financial crises? Aim: The research aims to investigate and determine the economic factors that necessitated the 2007- 2008 financial crisis Type of focus: Factors and their effects Introduction elements Hook 1: The 2007-2008 mortgage crises that was christened the Subprime still lingers in the minds of many. The financial ramifications that followed thereafter were felt by many. Hook 2: Speculation...
2 Pages(500 words)Essay

The 2007-2009 Financial Crisis

...although there was little to do as economic growth was concerned and this led to great recession by the US government. The main cause of the 2007-2009 financial crisis was as a result of improper credit rating, bad loans by banks, tax regulating policies and government incentives which were termed as misguided which lead to reckless lending and borrowing. The global crisis was also contributed by greed and lapse in ethical behavior of the agents who made the decisions that led to the crisis (Allison, 2013). These moral issues lead to the crisis especially where one party was in interest of the other but they had...
3 Pages(750 words)Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Causes of the 2007-08 Financial Crisis for FREE!

Contact Us