Causes for the 2007-2008 Subprime Mortgage Crisis - Dissertation Example

Research is not just the process of gathering information but it is answering the unanswered questions or creating something which does not currently exist (Goddard and Melville, 2004). In simple words research refers to the search for knowledge. Thus it can be defined as the systematic and scientific search for significant information on a definite topic. It involves defining and redefining a problem, preparing hypotheses or recommending solutions; collecting, analyzing, and evaluating the data; making inferences, and reaching conclusions and lastly, the conclusions are to be judged properly to determine whether the conclusion fits the hypothesis (Kothari, 2009).

The present study deals with the factors that caused the Subprime Mortgage Crisis. The study focuses on the roles of mortgage-backed securities on bank leverage. In order to conduct this research proper research method has been designed. This chapter introduces the background of the research, objectives of the study, problems and issues in the research, and the theoretical framework used in the research. Apart from these the study also sheds light on the methodology used, justifies the methodology, research philosophies, sampling techniques, and instruments used to collect data.

Finally, the study also explicates the ethical side of the study.

1.2 Justification of Methodology
The main objective of the study is to do an analysis of the causes of the Subprime Mortgage Crisis and the effects it has caused on the global economy. In this context, the study focuses on analyzing the case studies on Lehman Brothers and Northern Rock. At the same time, it also focuses on the other cause like the housing price index. In order to achieve the objectives, the study uses only a qualitative research approach.

The study heavily relies upon secondary data and not on primary data. Primary data results from firsthand observation and experience whereas secondary data results from what others have observed or experienced. Secondary data are easily available and are cheap as compared to primary data (Guffey and Loewy, 2009). The secondary data are collected using newspapers, journals, electronic sources, books, and magazines. Whereas primary data can be collected using the questionnaire. To meet these requirements, the study an extensive collection of only secondary data is required, which makes the application of qualitative methodology obligatory. 1.3 Research objectives The primary objective of the research is to find the causes and effects of the subprime mortgage crisis that occurred in the year 2008.

In order to successfully accomplish the study, an imperative understanding of the philosophical context of the research is necessary. Dainty (2007) emphasizes that while conducting research constructing an orientation and philosophical position towards the research is important. McCallin (2003) suggests that reviewing the philosophical background and considering the paradigm of inquiry should be done at an early stage of the research.