Financial Crisis

The 2008 global financial crisis is considered by many economists to be the worst financial crisis since the Great Depression of the 1930s. It resulted in national government bailing-out commercial banks and other large financial institutions while others, like Lehman brothers, collapsed. Consequently, there were short-term downturns in equity, credit and real estate markets around the world, and long-lasting effects on labour markets and economic growth. Previous studies have concluded that the crisis was caused by a number of factors, such as imprudent mortgage lending, inadequate pricing models for securitized debt obligations, poor risk models, deregulatory legislation (e.g. the repeal of the Glass-Steagall act in the US) combined with insufficient oversight, and excessive leverage and risk-taking.

Please choose ONE of the causes of the 2008 financial crisis and discuss it with specific reference to your knowledge of institutions in the global financial market.

GUIDELINE

Your essay should clearly demonstrate analytical, critical and evaluative skills and address your chosen cause of the 2008 financial crisis.

Evidence is expected of a wide background of reading and research, without which above average grades are unlikely. All references should be acknowledged (see Library handout on reference styles – Harvard approach is strongly recommended). Good standards of written English and presentation are expected and marks will be deducted if such standards are not met. Given the short length of the essay, a separate introduction and conclusion are not necessary.

In summary, this essay should:

1. Examine in depth the chosen cause of the 2008 financial crisis.
2. Evaluate the relevant regulatory changes, if any, which were undertaken as a result of the chosen cause of the 2008 financial crisis.
3. Offer suggestions on future resolutions to the chosen cause/problem.