2008 Financial Crisis: Cause & Regulatory Response

Abstract

The 2008 financial crisis brought about the worst economic depression since World War II. This paper covers the three main components of the economic meltdown, along with its cause, consequences, and countermeasures. The crisis emerged against a backdrop of rapidly expanding credit, high risk-taking, and heightened financial leverage. In particular, factors related to the real estate bubble are discussed, among which the subprime mortgage crisis has received widespread attention. The various impacts caused by the crisis are irreversible and affect the financial market to this day. Therefore, discussing various measures after the crisis is helpful to the development of the financial field. Whether it is analyzing monetary policy or fiscal policy, or the ever-renewing Basel Accords, they all help to improve global imbalances. Although the financial crisis emerges in the American market first, its widespread impact is beyond the scope. In this paper, the whole development of the 2008 financial crisis will be deeply discussed.