Advances in Economics, Management and Political Sciences
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Proceedings of the 7th International Conference on Economic Management and Green Development
Series Vol. 43 , 10 November 2023
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Subprime Crisis: Causes & Consequences
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Abstract
The 2007-2009 financial crisis, considered the worst crisis in human history since the Great Depression of the 1930s was not expected to end the period of the Great Moderation when financial and economic stability lasted from the mid-1980s to 2007. Although more than a decade has passed since the crisis, the analysis of the causes and consequences of the 2007-2009 financial crisis remains relevant for today's global economy, which is affected by both COVID-19 and the war in Ukraine. The crisis came as a surprise to almost everyone, but its roots were already in the U.S. financial system a decade ago. The explosion of the housing market in the United States at the beginning of the 21st century attracted a large number of banks and financial institutions to invest. The immediate cause of the financial crisis was the Federal Reserve's monetary policy, inflation in subprime mortgages, and the abuse of credit default swaps. The financial crisis also triggered a large number of banks to go bankrupt due to insolvency or default, and after the collapse of Lehman Brothers, the US government had to use a large number of emergency funds to bail out the market. These bailouts largely saved these too-big-to-fail companies and had no significant effect on the years of high unemployment.
Keywords
financial crisis, securitization, government bailout
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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 7th International Conference on Economic Management and Green Development
- ISBN (Print)
- 978-1-83558-107-0
- ISBN (Online)
- 978-1-83558-108-7
- Published Date
- 10 November 2023
- Series
- Advances in Economics, Management and Political Sciences
- ISSN (Print)
- 2754-1169
- ISSN (Online)
- 2754-1177
- DOI
- 10.54254/2754-1169/43/20232136
- Copyright
- 10 November 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