The Global Financial Crisis Essay -- subprime mortgages, Great Recessi

1.Introduction1.1.BackgroundThe Financial crisis was triggered in 2006 when US hold market began to crumble as the housing price reached their highest set after years of speculative price increase many theater of operations owners defaulted on their loans, particularly subprime mortgagers (Archarya et al., 2009). Starting in mid-2007, the outburst of US housing bubble in the subprime mortgage leads to the ball-shaped monetary crisis that has been often so called Great Recession (Verick and Islam, 2010).Archarya et al. (2009) states that it is widely agreed that the fundamental cause of this world(a) financial crisis was the creed boom and the housing bubble. While Poole (2010) argued that it is a misunderstanding to only take subprime mortgage issue as a strange reason of the crisis. With regard to the root causes behind the subprime mortgage issue, Verick and Isalam (2010) suggested below quaternity factors that are low interest rate allows banks to search for high hand o ver investment with high risk such as subprime mortgage (Crouhy et al. 2008) global imbalances between US the excessive consumption by depict and chinaware the excessive saving by surplus fuelled the housing bubble and credit boom, it is closely connected with financial crisis (Obstfeld and Rogoff, 2009) misperception the risk of the subprime mortgage defaults loose financial regulation that failed to control the standards in the mortgage market, and this point is supported by Crotty (2009) that regulators allow banks to hold assets off balance sheet without capital compulsion to support them.After this introductory section, section 2 discusses the impact of recessional on customer behaviour section 3 presents an analysis on how does the recession affect the companies profitabilit... ...une. usable at http//www.tradewindsnews.com/weekly/w2009-06-26/article200083.ece5 (Assessed on 30 November 2013)Vaitilingam, R., (2009). Recession Britain Findings from Economic and Social Resea rch. Online Available at http//www.esrc.ac.uk/_images/Recession_Britain_tcm8-4598.pdf (Assessed on 24 November 2013)UNCTAD, (2010). Review of World Maritime Transport 2010. Online Available at http//unctad.org/en/docs/rmt2010ch3_en.pdf (Assessed on 5 December 2013)Verick, S. and Islam, I., (2010). The Great Recession of 2008-2009 Causes, Consequences and Policy Responses. Online Available at http//papers.ssrn.com/sol3/papers.cfm?abstract_id=1631069 (Assessed on 21 November 2013) Yang, D., Liu, M.J. and Shi, X.N., (2011). Verifying Liner Shipping bail bonds Stability by Applying Core Theory. Research in Transportation Economics, 32(1), pp. 15-24.