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


Open Access | Article

Subprime Crisis: Causes & Consequences

Yanshuyao Zhou * 1
1 School of Pennon Education

* Author to whom correspondence should be addressed.

Advances in Economics, Management and Political Sciences, Vol. 43, 111-118
Published 10 November 2023. © 2023 The Author(s). Published by EWA Publishing
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.
Citation Yanshuyao Zhou. Subprime Crisis: Causes & Consequences. AEMPS (2023) Vol. 43: 111-118. DOI: 10.54254/2754-1169/43/20232136.

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

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 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
© 2023 The Author(s)
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

Copyright © 2023 EWA Publishing. Unless Otherwise Stated