Financial crisis

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Financial crisis

Show simple item record Duus Gebauer Christensen, Hans Henrik 2009-12-10 2009-12-10T10:30:32Z 2009-12-10T10:30:32Z 2009-12-10T10:30:32Z
dc.description.abstract This thesis describes the main events in the current crisis that has evolved since mid 2007. At the beginning it was an apparent isolated crisis in the subprime market, later it evolved into a liquidity crisis threatening financial institutions to bow under because of lacking liquidity. It then became a financial crisis causing large credit losses and defaults among large financial institutions before it spread into a severe economic crisis for especially the western world, causing recession and dramatically rising unemployment rates. The first part of the thesis concentrates on explaining the significant catalysts in the crisis, the factors that can explain why it went so wrong. The focus is on the US, the UK and the EU financial industries. The catalysts are the savings glut, the loose monetary policies conducted by central banks in the North Atlantic region, the shadow banking industry with its highly leveraged off balance sheet entities, the transaction processes that has developed into securitization, monoline insurance industries and rating agencies. The thesis also describes authorities’ role, the financial regulations that have shown to be insufficient as well as it examines the behaviour of the market participants, especially moral hazard which is a recurring theme in many of the catalysts. The thesis discusses the massive rescue plans and rescue packages that central banks and governments have provided to the financial industry since the crisis emerged. A large nationalization process has been conducted in order to save large financial institutions from default. The incentives for rescuing privately owned institutions with tax payers money is discussed and it is clear that some large financial institutions have been and still are systematically important and therefore too big to fail. It is in the society’s interest to save these large institutions in order to restore financial stability. Exit strategies from the government financed rescue packages are high on the political agenda at this point of time (medio September 2009), and the strategies for these are also discussed. It is evident to secure a smooth and sensible withdrawing of the subsidies in order to avoid new shocks to the financial markets. The financial regulations are discussed as well – it is crucial to enhance the regulations to prevent a repetition of the crisis. An excessive level of leverage are, without doubt, a significant reason of why the crisis evolved as severe as it did, and it is therefore crucial to tighten capital requirements in order to deleverage the financial industry. en_US
dc.format.extent 75 s. en_US
dc.language eng en_US
dc.subject.other Kandidatafhandlinger en_US
dc.title Financial crisis en_US
dc.type mop en_US
dc.accessionstatus modt09dec10 jobrmo en_US
dc.contributor.corporation Copenhagen Business School. CBS en_US
dc.contributor.corporationshort Department of International Economics and Management. INT en_US
dc.contributor.corporationshort Institut for International Økonomi og Virksomhedsledelse. INT en_US
dc.contributor.department MSc in Economics & Business Administration en_US
dc.contributor.departmentshort 22 en_US
dc.description.notes Cand.merc.ibs. International Business Studies en_US
dc.idnumber x656604297 en_US
dc.publisher.year 2009 en_US Frederiksberg en_US
dc.title.subtitle The role of excessive leverage in the financial industry and the implications en_US

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