A Symposium on the Subprime Crisis

2009 ◽  
Vol 8 (3) ◽  
pp. 341-345 ◽  
Author(s):  
Dan Immergluck
Keyword(s):  
The United States ◽  
Mortgage Lending ◽  
Mortgage Market ◽  
Subprime Crisis ◽  
Risk Capital ◽  
Subprime Mortgage ◽  
Financial Deregulation ◽  
Community Reinvestment ◽  
Vertical Disintegration ◽  
Mortgage Crisis

The subprime crisis in mortgage lending and the resulting wave of foreclosures have been hitting cities and communities all over the United States. First, Dan Immergluck argues that there are three main elements in the financial crisis: (1) the vertical disintegration of the mortgage market and the related securitization; (2) financial deregulation; and (3) the burgeoning supply of high–risk capital. Second, Manuel Aalbers counters the view that the Community Reinvestment Act (CRA) and the associated community reinvestment movement can be blamed for the subprime mortgage crisis. He lists five reasons why the CRA is not guilty. Third and finally, Peter Marcuse sees the subprime crisis as a result of the underlying economic system. He argues that the private sector should not be viewed as the appropriate means of providing housing. He discusses a number of proposals that impact on the crisis and its roots.

scholarly journals SUBPRIME MORTGAGE CRISIS IN THE UNITED STATES IN 2007–2008: CAUSES AND CONSEQUENCES (PART I)

Ekonomika ◽  
2015 ◽  
Vol 93 (4) ◽  
pp. 85-118 ◽  
Author(s):  
Vaidotas Pajarskas ◽  
Aldona Jočienė
Keyword(s):  
United States ◽  
Federal Reserve ◽  
The United States ◽  
Mortgage Market ◽  
Subprime Mortgage ◽  
Market Expansion ◽  
Mortgage Crisis ◽  
Subprime Mortgage Crisis ◽  
The Government ◽  
The Impact

The main purpose of this article is to determine which factors and how contributed to the subprime mortgage crisis in the United States in 2007–2008, what their causal links and effects on the markets and the whole economy were, and to assess what actions could have been taken by the Federal Reserve and the Government in order to mitigate or prevent the consequences of subprime mortgage crisis and housing bubble. In order to obtain the research results, the authors performed a qualitative analysis of the scientific literature on the course of events and their development that led to the subprime mortgage crisis, and focused on the insufficiently regulated home mortgage market expansion, the impact on the subprime mortgage crisis of financial innovations and financial engineering, poorly evaluated systemic risks and policy undertaken by both the U.S. Government and the Federal Reserve before and after the crisis. The quantitative research focused on two main parts: firstly, analysis of the dependence between the causes of subprime mortgage crisis and the consequences, using a statistical and regression analysis, and secondly, an alternative path the Government and the Federal Reserve could have taken in their policy actions and the results they could have produced. The authors believe that the results of the research could give useful guidelines to the central bankers and government officials on how to make long-term decisions that can help in preparing for the financial distress, mitigating the consequences when the crisis strikes, accelerating the recovery and even preventing the crisis it in the future. The second part of the qualitative research will appear in the next issue of the journal.

scholarly journals Subprime mortgage crisis in the United States in 2007–2008: causes and consequences (part II)

Ekonomika ◽  
2015 ◽  
Vol 94 (1) ◽  
pp. 7-41 ◽  
Author(s):  
Vaidotas Pajarskas ◽  
Aldona Jočienė
Keyword(s):  
United States ◽  
Federal Reserve ◽  
Quantitative Research ◽  
The United States ◽  
Mortgage Market ◽  
Subprime Mortgage ◽  
Mortgage Crisis ◽  
Subprime Mortgage Crisis ◽  
The Government ◽  
The Impact

This is the second part of the qualitative and quantitative research on the subprime mortgage crisis in the United States in 2007–2008. The main purpose of this research is to determine the factors and how they contributed to the subprime mortgage crisis, what their causal links and effects on the markets and the whole economy were, and to assess what actions could have been taken by the Federal Reserve and the Government in order to mitigate or prevent the consequences of the subprime mortgage crisis and the housing bubble. In order to obtain the results, the authors performed a qualitative analysis of the scientific literature on the course of events and their development that led to the subprime mortgage crisis and focused on insufficiently regulated home mortgage market expansion, the impact on subprime mortgage crisis of financial innovations and financial engineering, poorly evaluated systemic risks and policy undertaken by both the U.S. Government and the Federal Reserve before and after the crisis. The quantitative research focused on two main parts: firstly, the analysis of dependencies between the causes of subprime mortgage crisis and the consequences using the statistical and regression analysis; secondly, an alternative path the Government and the Federal Reserve could have taken in their policy actions, and the results they could have produced have been explored. The authors believe that the results of the research could give useful guidelines to the central bankers and government officials on how to make long-term decisions that can help in preparing for the financial distress, mitigating the consequences when the crisis strikes, accelerating the recovery and even preventing the crisis in the future.

A Critical Approach to the Subprime Mortgage Crisis in the United States: Rethinking the Public Sector in Housing

2009 ◽  
Vol 8 (3) ◽  
pp. 351-356 ◽  
Author(s):  
Peter Marcuse
Keyword(s):  
United States ◽  
Public Sector ◽  
Home Ownership ◽  
The United States ◽  
Subprime Crisis ◽  
Remedial Action ◽  
Critical Approach ◽  
Subprime Mortgage ◽  
The Public ◽  
Mortgage Crisis

The subprime crisis rests on three pillars: the dependence on profit–making in the provision of housing; the absence of adequate public regulation; and the myths of home ownership. Fourteen recommendations for remedial action are listed.

scholarly journals The consequences of subprime crisis for the Polish economy

Equilibrium ◽  
2009 ◽  
Vol 2 (1) ◽  
pp. 9-16
Author(s):  
Kornelia Gierczyńska ◽  
Andrzej Wojciechowski
Keyword(s):  
Stock Exchange ◽  
The United States ◽  
Mortgage Market ◽  
Subprime Crisis ◽  
Credit System ◽  
Subprime Mortgage ◽  
Gdp Growth Rate ◽  
Polish Economy ◽  
Globalized World ◽  
The Impact

In march 2008 the situation on the mortgage market was called a crisis. Many companies collapsed, including New Century Financial Corporation – the biggest credit company in the United States. After few months this virus infected other countries including Poland. The purpose of this article is to show the background of the subprime mortgage crisis and the possible outcomes for the Polish economy. The first part is trying to find out what are the causes and course of this financial breakdown. That part is mainly focused on subprime loans and its significance to this crisis. After that  paper contain information about the main channel of infestation, the securitization of the debt by the banks and selling the securities to the investors all over the world. The next chapter contains the data about the impact that crisis have on polish economy, including GDP growth rate and what would likely happen on housing market and stock exchange. Polish banking and credit system is sounder then American one and there is no risk of insolvency but still we are feeling the consequences of the financial crash. In the end author concludes that in the globalized world financial markets are linked and it is impossible to maintain unaffected by crisis that happened on the other side of the globe.

scholarly journals CONTAGION AND DOWNSIDE RISK IN THE REIT MARKET DURING THE SUBPRIME MORTGAGE CRISIS

2015 ◽  
Vol 19 (1) ◽  
pp. 42-57 ◽  
Author(s):  
Ming-Chi CHEN ◽  
Hsiu-Jung TSAI ◽  
Tien-Foo SING ◽  
Chih-Yuan YANG
Keyword(s):  
Stock Returns ◽  
The United States ◽  
The European Union ◽  
Subprime Mortgage ◽  
Crisis Period ◽  
Contagion Effects ◽  
Mortgage Crisis ◽  
Systematic Risks ◽  
Subprime Mortgage Crisis ◽  
Capm Beta

This study empirically tests the contagion effects in stock and real estate investment trust (REIT) markets during the subprime mortgage crisis by using daily stock- and REIT-markets data from the following countries and international bodies: the United States, the European Union, Japan, Hong Kong, Singapore, Australia, and the global REIT market. We found a significant and positive dynamic conditional correlation (DCC) coefficient between stock returns and REIT returns. The results revealed that the REIT markets responded early to market shocks and that the variances were higher in the post-crisis period than in the pre-crisis period. Evidence supporting the contagion effects includes increases in the means of the DCC coefficients during the post-crisis period. The Japanese and Australian REIT markets possess the lowest time-varying downside systematic risks. We also demonstrated that the “DCC E-beta” captures more significant downside linkages between market portfolios and expected REIT returns than does the standard CAPM beta.

Introduction

2017 ◽  
Author(s):  
Rachael Kiddey
Keyword(s):  
Urban Population ◽  
Real Life ◽  
The United States ◽  
Growing Up ◽  
Rural County ◽  
Subprime Mortgage ◽  
Mortgage Crisis ◽  
The World ◽  
School Uniform ◽  
Post War

As I write this book, statistics show that there is an increasing housing shortage that has been projected, by 2025, to leave a third of the global urban population living in substandard housing or going without essentials to pay for their housing. Homelessness is an increasing problem worldwide. In Britain, where the fieldwork drawn on throughout this book was conducted, the latest available statistics show that rough sleeping rose by 31 per cent between autumn 2014 and autumn 2015. In the United States, the number of people living in severely overcrowded households has risen by 67 per cent since the effects of the subprime mortgage crisis triggered the recession of 2007. If we add to this data the rising number of people who are being forcibly displaced from their homes by war and other violence, the need to study how homelessness materializes and shapes the world around us becomes more urgent. As a child growing up by the sea in Devon, a rural county in the south-west of England, I initially encountered homelessness in two ways: the first was while on a rare shopping trip to Plymouth to buy school uniform in 1986. I was 8 years old. It was raining and the post-war architecture loomed greyer than usual. A man sitting on the pavement huddled his dog close to him, their heads down. I asked my mum what he was doing. ‘He’s homeless. Poor man! Don’t stare,’ she said. Her words rang in my ears as I tried, but failed, to conceive of having no home. The second encounter was more cheerful. I grew up in a house by the River Avon.5 When the tide is out, the riverbed becomes a mudflat, and in July and August it is green with samphire. A tramp called Albert, his yellow oilskins and bushy white beard making him seem to me a real-life Captain Birdseye, could be seen collecting samphire from the riverbed every summer until he died. A bench has since been erected in his memory. Albert was homeless too, but in a different, older way than the man I remember from Plymouth.

The Global Recession of 2007–2009: The Moral Factor and Jewish Law

2010 ◽  
pp. 403-428
Author(s):  
Aaron Levine
Keyword(s):  
United States ◽  
The United States ◽  
Mortgage Market ◽  
Jewish Law ◽  
Subprime Mortgage ◽  
The Great Depression ◽  
Global Recession ◽  
United States Economy ◽  
Moral Factor ◽  
Home Mortgage

This article focuses on the recent global recession that raged the world and in particular the United States with special reference to Jewish law. In December 2007, the United States economy plunged into the longest and deepest downturn since the Great Depression. The driving force behind the recession was the widespread failure of the subprime mortgage market, the segment of the home mortgage market extending loans to households with impaired credit histories and with little or no documentation of income. The collapse of that sector occurred in a rapid succession of events beginning with the fall of Countrywide Financial in January 2008. This article further moves to explain the moral factor pervading the recession and analyses the situation as per Jewish law. The central relevant moral dictum of Jewish law is the Imitatio Dei principle, which says that, in our interpersonal conduct, we should emulate the various attributes of mercy.

scholarly journals U.S. Sub-Prime Crisis: Origin and Causes

2020 ◽  
Vol 3 (1) ◽  
pp. 24-33
Author(s):  
Sangeeta Sangeeta ◽  
Vinay Chamoli
Keyword(s):  
Global Economy ◽  
Credit Rating ◽  
Home Country ◽  
Mortgage Lending ◽  
Subprime Crisis ◽  
Subprime Mortgage ◽  
Rating Agencies ◽  
Crisis Events ◽  
Mortgage Backed Securities ◽  
Boom And Bust

The purpose of this paper is to explain the boom and bust of the housing market in the U.S. and how the sub-prime mortgages gave birth to new securitized products in the global economy. The majority of the researches conducted previously to explore the reason for the sub-prime crisis and its impact on the volatility on the stock market of the home country (U.S.) and the other developing countries. This paper also contributes to the literature about causes, timeline, and major crisis events during the crisis period. The literature on the Subprime crisis revealed many causes of the Sub-prime crisis. These were Imprudent Mortgage Lending, Housing Bubble, Global Imbalances, Securitization, Lack of Transparency and Accountability in Mortgage Finance, Rating Agencies- The credit rating agencies gave AAA ratings to numerous issues of subprime mortgage-backed securities, many of which were subsequently downgraded to junk status. Deregulatory Legislation, Government-Mandated Sub-prime Lending, Complexity of certain financial instruments, Failure of Risk Management Systems, Excessive Leverage and Relaxed Regulation of Leverage were the most discussed reasons of Subprime Crisis.

scholarly journals Revisiting Stock Market Integration Pre-Post Subprime Mortgage Crisis: Insight From BRIC Countries

2015 ◽  
Vol 61 (2) ◽  
pp. 120 ◽  
Author(s):  
Chin-Hong Puah ◽  
Rayenda Khresna Brahmana ◽  
Kai-Hung Wong
Keyword(s):  
Stock Market ◽  
Financial Crises ◽  
Market Integration ◽  
Subprime Crisis ◽  
Subprime Mortgage ◽  
Stock Market Integration ◽  
Bric Countries ◽  
Mortgage Crisis ◽  
China Stock Market ◽  
Subprime Mortgage Crisis

AbstractThis study revisits the long-run relationships and short-run dynamic causal linkages among BRIC stock market, with the particular attention to the 2008 subprime mortgage crisis. Extending related empirical studies, comparative analyses of pre-crisis, and post-crisis periods were conducted to comprehensively evaluate how stock market integration was affected by financial crises. In general, after employing cointegration test and VAR test, the results reveal the increase of stock market integration in BRICs after the subprime crisis. The evidence also found that China stock market is the most influential among the BRICs, in which China stock market has the ability to Granger cause the other three BRICs member countries. An important implication of our findings is that the degree of integration among countries tends to change over time, especially around periods marked by financial crises. AbstrakPenelitian ini mengkaji ulang hubungan jangka panjang dan hubungan kausal dinamis jangka pendek antara pasar modal negara-negara BRIC, terutama pada saat krisis subprime mortgage 2008. Pengayaan studi empiris yang terkait dan analisa perbandingan sebelum-sesudah krisis dilakukan untuk mengevaluasi secara komprehensif tentang bagaimana krisis keuangan memengaruhi integrasi pasar modal. Secara umum, setelah menggunakan uji kointegrasi dan uji VAR, hasil penelitian ini memperlihatkan peningkatan integrasi pasar modal di negara-negara BRIC setelah terjadinya krisis subprime. Penelitian ini juga membuktikan bahwa pasar modal Cina adalah pasar yang paling berpengaruh di antara negara BRIC, di mana pasar modal Cina memiliki kemampuan untuk memengaruhi secara Granger Causality tiga negara anggota BRIC lainnya. Implikasi penting dari temuan kami adalah bahwa tingkat integrasi antara negara-negara cenderung berubah dari waktu ke waktu, terutama sekitar periode yang ditandai oleh krisis keuangan.Kata kunci: Integrasi Pasar; Subprime Mortgage; Krisis Keuangan; BRICJEL classifications: F15; G15; G21; C32

scholarly journals Influence of the American Financial Market on Other Markets During the Subprime Crisis

2012 ◽  
Vol 12 (2) ◽  
pp. 19-30
Author(s):  
Piotr Płuciennik
Keyword(s):  
Capital Market ◽  
Mortgage Market ◽  
Parametric Models ◽  
Garch Models ◽  
Subprime Crisis ◽  
Subprime Mortgage ◽  
Data Space ◽  
The Great Depression ◽  
The Usa ◽  
National Economies

Abstract Subprime crisis which started in the USA in 2007 was the cause of the most significant economic disturbances since the Great Depression in 1930s. Soon it transmitted to other countries, including those in which banks were not engaged in the subprime mortgage market. The crisis hit various sectors of national economies and led to changing of the trends on the stock markets, which are connected to American capital market. In the following article we researched the influence of the American market on the other markets in the context of the financial crisis. Our analysis is based on the results obtained from the multivariate parametric models. Seeing that the data space is high-dimensional, we used GO-GARCH models introduced by van der Weide (2005) and Boswijk and van der Weide (2006).

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