Advances in Economics, Management and Political Sciences
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Proceedings of the 2nd International Conference on Business and Policy Studies
Series Vol. 9 , 13 September 2023
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Access | Article
Securitization: The “curse” of the Financial System during the 2008 Crisis
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Abstract
During the 2008 financial crisis, many investment and commercial banks were hit hard. The primary reasons that caused the financial crisis were the abuse of mortgage securitization and the housing bubble. In this paper, our group mainly focused on the potential issue of the mortgage securitization structure and the impact that the abuse of securitization caused. Our group analyzed the correlation between mortgage defaults through the OLS linear regression model. It showed an underestimation of the possibility of defaulting on securitization products (MBS, CDO, etc.). Furthermore, our group analyzed the expansion of this potential risk due to the raised housing bubble. After analyzing the potential risk, our group analyzed the impacts that the securitization caused in macro and micro views. First, our group analyzed vital factors that affect bank performance using the OLS linear regression model. Moreover, based on the change of these critical factors caused by the exposed potential risk from the securitization structure, our group analyzed the bank’s performance during the financial crisis. Second, our group analyzed the macro impacts before, during, and after the financial crisis due to the abuse of securitization. Overall, according to the potential risk in the securitization structure and the macro and micro impacts caused by the exposed potential risk, our group concluded that the abuse of securitization was the “curse” for the whole financial system at that time.
Keywords
the abuse of securitization, securitization structure, financial crisis
References
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Data Availability
The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.
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- Volume Title
- Proceedings of the 2nd International Conference on Business and Policy Studies
- ISBN (Print)
- 978-1-915371-45-4
- ISBN (Online)
- 978-1-915371-46-1
- Published Date
- 13 September 2023
- Series
- Advances in Economics, Management and Political Sciences
- ISSN (Print)
- 2754-1169
- ISSN (Online)
- 2754-1177
- DOI
- 10.54254/2754-1169/9/20230347
- Copyright
- 13 September 2023
- Open Access
- This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited