StudentShare solutions
Triangle menu
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.

Why did the 2007 financial crisis spread so quickly and so far - Essay Example

Nobody downloaded yet

Extract of sample
Why did the 2007 financial crisis spread so quickly and so far

The crisis also led to the global recession in 2008 following its effects on international trade (Acharya & Matthew, 2009).
The financial crisis is believed to be as a result of increased values of securities related to the United States of Americas in the stock market. The increase on the securities was as a result of the housing bubble which reached its optimum in 2006, affecting many financial institutions worldwide. Therefore, the crisis was a result of a complicated interplay between policies that enabled home ownership through the provision of cheaper loans to potential home buyers. Subprime mortgages were hence overvalued based on the presumption that real estate prices would continue to escalate. The global stock markets suffered heavily when real estate securities suffered large losses as a result of declining credit availability and dented investor confidence. Most economies globally slowed down during this period as a result of credit unavailability and a decline in international trade (Caballero, Pierre-Olivier & Emmanuel, 2008).
The financial crisis was primarily an internal problem in the United States of America. The crisis began as a subprime crisis in the country in 2007 and spread over to other advanced countries. The crisis commenced with an enormous real estate asset bubble. Housing prices dramatically escalated in the United States with mortgage rates lower than normal mainly because of the Federal Reserve lowering the federal funds. Federal funds are the rate at which financial institutions lend each other overnight (Ely, 2009).
In order to avoid losses, mortgage lenders have traditionally been very strict in scrutinizing the eligibility of a citizen in terms of repaying the loan. However, this did not happen in the United States of America when there was widespread securitization. Securitization allowed banks to lend mortgage loans to many jobless individuals with no income or assets at all. Loan regulators also authorized ...Show more
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Why did the 2007 financial crisis spread so quickly and so far Essay”, n.d.)
Retrieved from https://studentshare.net/social-science/757135-why-did-the-2007-financial-crisis-spread-so-quickly-and-so-far
(Why Did the 2007 Financial Crisis Spread so Quickly and so Far Essay)
https://studentshare.net/social-science/757135-why-did-the-2007-financial-crisis-spread-so-quickly-and-so-far.
“Why Did the 2007 Financial Crisis Spread so Quickly and so Far Essay”, n.d. https://studentshare.net/social-science/757135-why-did-the-2007-financial-crisis-spread-so-quickly-and-so-far.
  • Cited: 0 times

Summary

It was the most catastrophic financial stress as it affected many financial institutions including banks, which had to be bailed out through monetary policy expansion…
Save Your Time for More Important Things
Let us write or edit the essay on your topic
"Why did the 2007 financial crisis spread so quickly and so far"
with a personal 20% discount.
Grab the best paper

Check these samples - they also fit your topic

Financial Crisis of 2007-2009
The disaster left no economies and financial systems unaffected with its drastic and harsh effect. Both developed and under developed countries felt radical effects of recession when the deficit of liquidity/cash elicited in banking sector of United States, thus, begetting the conditions of economic instability and volatility along with the crumple of financial institutions, and the downfall in stock market.
5 pages (1250 words) Essay
Reflection Paper - 10 Principles learned so far
The details and the clearly structured sequence of events that depict incident were so vivid, effectively illustrating the scenes, the emotions felt, the commotion, and even the respect accorded by the author, who was the narrator and the police officer supposedly tasked to take a ‘perfect picture’ to report the crime.
2 pages (500 words) Essay
Mexican History: So Far From God
While the names of the first three daughters represent the three foremost Christian ideologies, the fate of these characters is the direct opposite of the embodiment of each ideology. The story tells about life, death, sexuality and the link between two worlds: the world of the living and the spiritual kingdom.
6 pages (1500 words) Essay
2007 financial crisis
1. 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).
5 pages (1250 words) Essay
Financial Crisis of 2007
When considering the possible causes for this economic situation, fundamental defect of the free market system is the prominent reason for the crisis. In the US economy, a secure and sustainable economic order is not ensured by the economic regulatory. As a result, banks and financial institutions in the developed countries are not restricted from spending more than what they can afford.
7 pages (1750 words) Essay
The Financial System Crisis of August 2007
The immediate cause of the crisis was rise in interest rates in the mortgage market so that people with home loans, paying adjustable interest rates, found themselves with spiraling interest payments. This in turn was the result of the liquidity crunch that banks faced as a result of growth in lending to borrowers of the sub-prime category, that is, those who had less than adequate credit worth.
5 pages (1250 words) Essay
Why did TV spread so fast around the world
In the western societies television is seen as a culture as has risen from a mere local innovation to a global phenomenon. With both the positive and negative influence, people around the world tend to have the feeling that the positive side of TV matters
4 pages (1000 words) Essay
2007-2009 Financial Crisis
Thesis statement: The 2007-2009 Financial Crisis resulted in unemployment, banking collapse, and decline in international trade. As pointed out, the financial crisis of 2007-2009
1 pages (250 words) Essay
Causes for the 2007-08 Financial Crisis
ry Institutions Deregulation and Monetary Control Act of 1980 enabled financial institutions to influence the nature of monetary policies thus making the economy susceptible to non-factual policies, as was the case in 2006. Thesis Statement: There are several fundamental
2 pages (500 words) Essay
The 2007-2009 Financial Crisis
The 2007-2009 Global financial crisis threatened the collapse of some of the greatest financial institutions. The reason the effect was felt by many financial institutions is that they had invested mortgages which lead to deterioration in the balance sheet of the banks as a result of housing bubbles.
3 pages (750 words) Essay
Comments (0)
Click to create a comment
Let us find you another Essay on topic Why did the 2007 financial crisis spread so quickly and so far for FREE!
Contact us:
+16312120006
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us