A careful analysis of the sub-prime crisis reveals that it was created from the slump in housing prices that created a ‘bubble’ of expectations among investors. By the end of third quarter of 2007, the prices of underlying assets declined drastically and the value of mortgage based securities was higher than asset. This motivated investors to default on mortgages as they felt that actual worth of asset is not worth repayment. The depressing effect was amplified further by securitization of assets. The impact of sub-prime crisis was not limited to US banks but almost all commercial banks and financial institutions around the world that had considerable exposure in US Mortgage Backed Securities (MBS) were either affected directly or indirectly from the subprime crisis. In order to rescue the financial market, the US Federal Reserve responded swiftly through cutting key monetary policy interest rates and also extended financial support to mortgage lenders and house buyers who were defaulted or would seemingly default. The objective of the study is to reveal the effect of the U.S. Subprime Crisis to the China commercial banks in 2008-2013. In order to achieve objective the study covers the literature review and theoretical framework of the topic. Research design has been done with the intention of selecting appropriate methodology and data collection analysis. Moreover the data analysis will help to get the findings of the project. After interpreting the research findings, finally the study ends with conclusion, recommendations and reflections. Background of the Study Freddie Mac and Fannie Mae was together accountable for almost half of the mortgage market in US which is valued to be worth over US$ 10 trillion. The many previous studies have also found that the government of China is among the top five international holders of Fannie Mae and Freddie Mac long-term debt. The Bank of China announced that it had Freddie and Fannie bonds worth $7.5 billion at the end of August 2008 after cutting its holdings by 25 percent. The country’s largest commercial lender, ICBC stated that at the end of August 2008 it held bonds in Freddie and Fannie debt worth $465 million in addition to $2.2 billion in mortgage backed securities issued by the US companies. The second largest
Cite this document
(“The effect of the U.S. Subprime Crisis to the China commercial banks Dissertation”, n.d.)
Retrieved from https://studentshare.net/finance-accounting/113042-ypwhatyies-the-effect-of-the-us-subprime-crisis-to
(The Effect of the U.S. Subprime Crisis to the China Commercial Banks Dissertation)
“The Effect of the U.S. Subprime Crisis to the China Commercial Banks Dissertation”, n.d. https://studentshare.net/finance-accounting/113042-ypwhatyies-the-effect-of-the-us-subprime-crisis-to.
Cited: 0 times
The sub-prime mortgage crisis that originated in the United States of America basically started from August 2007 and had transformed the financial markets around the world. A careful analysis of the sub-prime crisis reveals that it was created from the slump in housing prices that created a ‘bubble’ of expectations among investors…
In 2008 the world faced a financial meltdown. Globally the world faced major financial crisis and recession. The economic recession was a result of the US mortgage crisis. The subprime crisis of US caused ripple effect across the globe as a result most of the countries felt a financial crunch.
This research discusses the strategic ways on how to implement a cross border merger followed by analyzing the advantages of investing through them and tackles in details internal and external factors that need to be considered prior to a merger, the reasons for behind a successful or failed overseas mergers, impact on the shareholders’ value and the trend of global mergers post the financial crisis.
Despite the benefits, globalization has also created the phenomenon of the global financial crises and the worldwide economic recession that typically follows it. Prior to the globalization of the financial system, banking panics were usually contained within individual nations, and faulty national policies had little repercussions beyond the boundaries of that particular jurisdiction.
This crisis, which started within the banking sector, occurred mainly owing to the lackadaisical nature of the regulation on the money lending processes adopted by the various banks. In UK, this financial crisis resulted owing to many incidents (the causal factors) that had occurred simultaneously, all of which contributed to this disaster.
In the past, there used to be elite existences that were responsible for maintaining inflow and outflow of money in the market; however, since few decades, commercial banks have been performing this imperative task to maintain and improve economy of the country.
Results and Findings 12 2.1 Lehman Brother 12 2.1.1 Lehman Brother before Bankruptcy 12 2.1.2 Bankruptcy of Lehman as a pointer of Subprime crisis 14 2.1.3 Effects of Bankruptcy of Lehman Brothers 16 2.2 Northern Rock 17 2.2.1 Pathway to Bankruptcy 18 2.2.2 Spill over effect of US sub-prime crisis on UK 19 2.2.3 The positive outcome 20 2.3 Housing Price Index 23 4.
dollar. It has started in the United States (U.S.) and rapidly spread to Europe, United Kingdom (U.K.), Asia and other economies around the world in the late 2008 will have a broad impact, particularly in the short term (Peters, 2010, pp.1-2). It is having strong consequences through the bank lending channel such as the banks of U.K.
What is consumer behavior? It entails the psychological processes that consumers go through in the recognition of their needs, in finding ways of meeting these needs, when making purchasing decisions Wayne, D (2008). In other words, consumer behavior can be described as the study of “why people buy”.
2 pages (500 words)Dissertation
Got a tricky question? Receive an answer from students like you!Try us!
Let us find you another Dissertation on topic The effect of the U.S. Subprime Crisis to the China commercial banks in 2008-2013 for FREE!