Essays on Causes of 2008 Global Financial Crisis Case Study

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The paper "Causes of 2008 Global Financial Crisis" is a perfect example of a macro & microeconomics case study.   The 2008 global financial crisis (GFC) has been termed the worst by economists, since the great depression that occurred in the 1930s (Shiller, 2008). The crisis was marked by a major decline in the global economy beginning in late 2007, which then experienced a sharp downturn by September 2008. Frankel and Saravelos (2010) assert that the initial phases of the financial crisis which started as a form of liquidity crisis became patent from august 2007.

This is when BNP Paribas ended its withdrawals from the potential three hedge funds, referring to “ total evaporation of liquidity” . The global financial crisis has affected the whole global economy, but with greater detriment in some countries as compared to others (Shiller, 2008). Various factors have been directly or indirectly known to the 2008 financial crisis, with analysts placing varied weights upon specific causes (Frankel & Saravelos, 2010; Shiller, 2008). The crisis resulted in failure or even the risk of failure within major financial institutions worldwide. The crisis is associated with complex financial activities of the period between 2002 and 2008.

These included the easy credit conditions experienced during that period which promoted high-risk lending and extensive borrowing practices; real estate bubbles which caused their burst since then (Shiller, 2008); international trade imbalances (Obstfeld & Rogoff, 2009). ; securitization; monetary policy choices that related to government expenses and revenues. Moreover, the approaches employed by countries in bailing out the then troubled private bondholders, banking industries, as well as assuming socializing losses or private debt burdens (Rose & Spiegel, 2012). The 2008 financial crisis was a major global downturn that was characterized by various kinds of system imbalances and sparked by the outbreak of the subprime mortgage crisis in the United States.

References

Shiller, R. J. (2008). The subprime solution: How today's global financial crisis happened, and what to do about it. Princeton University Press.

Frankel, J. A., & Saravelos, G. (2010). Are leading indicators of financial crises useful for assessing country vulnerability? Evidence from the 2008-09 global crisis (No. w16047). National Bureau of Economic Research.

Crotty, J. (2009). Structural causes of the global financial crisis: a critical assessment of the ‘new financial architecture’. Cambridge Journal of Economics, 33(4), 563-580.

Obstfeld, M., & Rogoff, K. S. (2009). Global imbalances and the financial crisis: products of common causes. Centre for Economic Policy Research.

Obstfeld, M., & Rogoff, K. S. (2009). Global imbalances and the financial crisis: products of common causes. Centre for Economic Policy Research.

U.S, Financial Crisis Inquiry Commission. (2011). Financial crisis inquiry report: final report of the national commission on the causes of the financial and economic crisis in the United States. Government Printing Office.

Acharya, V. V., Cooley, T., & Richardson, M. (2010). Manufacturing tail risk: A perspective on the financial crisis of 2007-2009. Now Publishers Inc.

Humphrey, C., Loft, A., & Woods, M. (2009). The global audit profession and the international financial architecture: Understanding regulatory relationships at a time of financial crisis. Accounting, Organizations and Society, 34(6), 810-825.

Blanchard, O. J., & Milesi-Ferretti, G. M. (2009). Global imbalances: in midstream?. International Monetary Fund.

Jickling, M. (2010). Cause of the Financial Crisis. Washington DC: CRS Report for Congress.

Ouarda., Eriend, N. (2010). What Caused the Global Financial Crisis?-Evidence on the Drivers of Financial Imbalances. Washington DC: International Monetary Fund .

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