Journal articles on the topic 'Market integration; subprime 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

The paper analyses if the interrelation between Spanish stock market and stock markets of USA, UK, German and France has been affected, and how, by subprime crisis. For that, a bivariate VAR-GARCH model has been estimated, over the period January 2000 to June 2012. A measure of integration degree, as the conditional correlation coefficient, is obtained from the estimated model. Analysing this measure leads to conclude that subprime crisis had a contagion effect. Moreover, the empirical evidence allows concluding that in poscrisis period the interrelation between Spanish market and French market has increased, while the interrelation with British market has reduced. On the other hand, the interrelation of Spanish stock market with German and USA stock markets have gone back to the level before subprime crisis.

This study investigates the time-varying integration of stock markets from a global and regional perspective, the consequences of two major global financial crises, i.e., the Asian Financial Crisis and the subprime mortgage, and the Crisis triggered by COVID-19. We contribute to the growing amount of literature on market integration, especially on the role of regional to global market integration. Although regional integration encourages an acceleration of global integration, the effect of a regional factor is not uniform among regions. It is important to understand regional to global market integration and the consequences during the crises. This study employs time-series data from economic territories based on the Morgan Stanley Capital International (MSCI) Asia-Pacific classification. It introduces an alternative measurement of time-varying integration by considering the correlation of regional and global markets using a simple international model, equivalent to the capital asset pricing model (CAPM). The result shows that the market integrations are time-varying both globally and regionally. The domestic markets are affected by the global market and its regional market, as the role of a regional market emerges during the financial crisis period. We find the different responses of stock markets during the Covid-19 period as a dominant factor to exacerbate the market return globally. In the long run, the upward trend for the regional market integration in both developed and emerging markets is inherent to the global market integration.DOI: 10.26905/jkdp.v25i3.5822

Introduction/Main Objectives: This study investigates the relationships between equity markets during the Asian financial crisis and the subprime mortgage crisis in Asia-Pacific. Background Problems: The advantages of market integration are under scrutiny in the midst of global financial crises, which have many implications for international asset pricing and regulators to develop strategies to protect economies. During the crises, the equity markets responded with different patterns, and it is important to understand in more detail the market relations during each crisis, especially for the less and more integrated markets. Novelty: We provide in-depth analysis to compare the market relationships during two extremely different financial crises originating from less integrated markets (i.e., emerging ones) and more integrated markets (i.e., developed ones), based on the prices which give a direct measurement and clear interpretation. This research provides a significant contribution by showing new findings in the form of a comparison of market relations during two extremely different crises in the Asia-Pacific region. Research Methods: This study employs time-series data from economic territories based on the Morgan Stanley Capital International (MSCI) Asia-Pacific classification and the United States. We conducted analysis using the vector autoregressive, Granger causality test, and impulse response, to point out the market relationships during the crises or turmoil periods. Finding/Results: The results show that the Asian financial crisis affected the emerging markets more and this indicates the unidirectional causality relationships among them. Meanwhile, the subprime mortgage crisis affected all the markets, but more indicated the bidirectional relationships, especially the developed markets. Conclusion: Although these two financial crises were global in nature, the effects on the region were different. The origin of the shock and the level of market integration affected the market relationships differently during the crises.

Abstract The main goal of this paper is to explicitly test a research hypothesis that there was no integration effect among the U.S. and the eight Central and Eastern European (CEE) stock markets during the 2007-2009 Global Financial Crisis (GFC). As growing international integration could lead to a progressive increase in cross-market correlations, the evaluation of integration was carried out by applying equality tests of correlation matrices computed over non-overlapping subsamples: the pre-crisis and crisis periods, in the group of investigated markets. The crisis periods are formally established based on a statistical method of dividing market states into bullish and bearish markets. The sample period May 2004-April 2014 includes the 2007 U.S. subprime financial crisis. The robustness analysis of the integration tests with respect to various data frequencies is provided. The empirical results are not homogeneous and they depend both on the integration test and data frequency. Consequently, it is not possible to conclude whether integration between the investigated markets is present.

This paper empirically discovered the inter-linkages between stock and crude oil prices before and after the subprime financial crisis 2008 by using Johansan co-integration and Granger causality techniques to explore both long and short- run relationships. The whole data set of Nifty index, Nifty energy index, BSE Sensex, BSE energy index and oil prices are divided into two periods; before crisis (from February 15, 2005 to December31, 2007) and after crisis (from January 1, 2008 to December 31, 2018) are collected and analyzed. The results discovered that there is one-way causal relationship from crude oil prices to Nifty index, Nifty energy index, BSE Sensex and BSE energy index but not other way around in both periods. However, a bidirectional causality relationship between BSE Energy index and crude oil prices during post subprime financial crisis 2008. The co-integration results suggested that the absence of long run relationship between crude oil prices and market indices of BSE Sensex, BSE energy index, Nifty index and Nifty energy index before and after subprime financial crisis 2008.

We investigate the contagion dynamics in the main Economic and Monetary Union sovereign bond markets during the subprime and euro crises. To this end, we adopt the APARCH-ADCC model and the Markov Switching Dynamic Regression model. The impact of both crises on each country in our sample is investigated using two crisis indicators: synchronization and intensity. The empirical results show that contagious episodes and their intensities vary over time and across market pairs for both crises, thus illustrating the complexity of this phenomenon. They also reveal that the market couples composed of the Economic and Monetary Union peripheral countries were immune to the contagion of the subprime crisis and that its third phase was the most violent in terms of the intensity of the transmission of shocks. Moreover, the results show that all the countries in our sample were affected by contagion from the euro crisis, at least during one of its sub-phases. Furthermore, before the first rescue plan for the Hellenic economy, our methodology detected a contagion effect stemming from Italy, Spain, and Portugal, while intuitively one could have imagined this phenomenon coming solely from the Greek sovereign market. Finally, the analysis of the synchronization and intensity variables provides evidence of a « multi-speed Economic and Monetary Union », refuting the notion of uniform integration of the euro area sovereign bond markets. We believe that it is necessary to complete the institutional architecture of the Economic and Monetary Union to make it more resilient to shocks.

The magnitude of the subprime crisis effects caused recessions in several economies, giving rise to the global financial crisis. The scale of this major shock and the different recovery profiles of European economies motivated this paper. The main objective is to look for evidence of contagion between the North American financial market (S&P500) and the financial markets of Portugal (PSI20), Spain (IBEX35), Greece (ATHEX) and Italy (FTSEMIB), in the South of Europe, and the financial markets of Sweden (OMXS30), Denmark (OMX2C0), Finland (OMXH25) and Norway (OsloOBX), in the North of Europe. Considering the period from January 1, 2003 to December 31, 2013, the ARMA-GARCH models were estimated to remove the autoregressive and conditional heteroscedastic effects from the time series of the daily returns. Then, the copula models were used to estimate the dependence relationships between the European stock indexes and the North American stock index, from the pre-crisis subperiod to the crisis subperiod. The results indicate financial contagion of the subprime crisis for all analyzed European countries. The North European markets intensified the relations of financial integration (both in negative and positive shocks) with the North American market, apart from the Danish against the Portuguese. In addition to the contribution made by the joint application of the ARMA-GARCH models, the findings are useful to identify channels of financial contagion between markets and to warn about the effects of possible new crisis, which will require different levels of adaptation by the companies’ financial managers and intervention by the authorities.

The objective of this article is to highlight the nature of the relationship between several stock markets (France, the great Britain, Germany, and United States). The behavior of those facing the subprime crisis that took place in United State markets we tried to analyze in August 2007. Empirically to make think back to these questions, we relied primarily on testing correlation. The result of this test demonstrates the significant increase in the correlation between stock markets: US, French, Germany and Britain during the period of the crisis. We interpret this increase as evidence of contagion. Secondly, it was based on the theory of co-integration. The results of the co-integration tests show the existence of three co-integration relationships between the most stock markets. The existence of co-integration relationship is evidence of contagion and integration of stock markets. Thirdly, we tried to apply the causality test between stock indices. The result of this test shows the existence of several causality between these indices confirming the importance of contagion during the crisis.

This paper uses a wide variety of copulas to study the correlation between the US market and a sample composed of nine developed and emerging markets over a 13 years period, including the subprime crisis. We try to analyze the markets behavior during high volatility periods and assess if the financial crisis led to a significant and durable change in the cross-market correlation patterns. Results offer strong evidence in favor of a contagion effect. Developed markets are those who registered the most important increases in cross-market correlations during high volatility periods. This may be attributed to their high degree of financial integration. However, cross-market correlation is weak for the whole sample period and decreased during the post-crisis period, implying that international diversification still offers interesting opportunities for investors. Moreover, diversification opportunities are not restricted to emerging markets but also concern developed markets.

The aim of this paper is to analyze the impact of the Global Financial Crisis (GFC) on the co-integration relationship between the REIT and stock market indices using a sample of 10 developed countries. The main tool employed for this purpose is the dynamic co-integration approach. The empirical results strongly suggest that the stock and REIT markets were deeply affected by two successive crises. The first crisis was related to the U.S. subprime problems while the second shock emanated from the European insolvency problems. The shocks led to serious structural breaks in the financial data during the 2007-2012 period. As a result of this and the highly variable nature of the co-integration structure during this period, the conventional and static Johansen tests cannot detect the strong co-integration between the REIT and stock markets which were the result of common negative response of both markets to the successive shocks. Dynamic co-integration approach seems to be a more valid tool to capture the dynamics of the co-integration structure after the GFC. The dynamic approach implies that the destruction of diversification benefits between the REIT and stock markets was essentially a shock related outcome which also implies that the diversification potential between these two markets may still be valid in the absence of shocks.

Purpose – The purpose of this paper is to analyze the intensity of transmission of shocks from USA to BRICS countries in the long-run and short-run deviations and swiftness of recovery during US subprime mortgage crisis. This analysis enables the authors to explore the evolving patterns of relationships between these markets and examine whether their co-movements altered either in response to international shocks that originated in advanced markets like USA or due to their domestic fluctuations. Design/methodology/approach – Employing data of daily stock market indices (open and close) of BRICS countries for the period January 2, 2001 to May 31, 2012, this paper examines the interactions and characteristics of price movements of BRICS with US market by applying co-integration tests, vector error correction model and Granger causality relationship. The daily stock market indices data are derived from respective stock exchange web sites. Findings – The results exhibit that both long-run co-integration relationships and short-run Granger causality relationships exist between the stock markets of US-BRICS. Furthermore, this nexus is amplified in the short-run during 2007-2009, when the subprime mortgage financial crisis in the USA cropped up. This finding lends support to the prominence of developed (US) market links in the proliferation of persistent co-movements of BRICS stock markets. Research limitations/implications – The findings imply an increasing degree of global market integration due to quick dissemination of global shocks originating from developed market like USA, and swift recovery which can be attributed to the increased resilience, consistent with the moderated level of domestically driven risk in the BRICS markets. In spite of their similarities, long-run and short-run interdependences with the US stock market exhibit differences among the BRICS. This can be attributed to the regional heterogeneity in long-run risk and return co-movements with the USA. Practical implications – Changes from the US index easily affect these stock markets in the short-run, which implies that the US index may act as a leading indicator for investing funds in BRICS markets. Originality/value – This study would enable the authors to understand whether BRICS economies actually remain resilient to adverse developments in USA and could serve as alternative investment destinations for global portfolio diversification.

Purpose The purpose of this paper is to investigate the cointegration and volatility spillover dynamics between the USA and South Asian stock markets, namely, India, Pakistan and Sri Lanka. The main objective of this study is to provide the knowledge about integration of financial market and volatility spillovers before, during and after global financial crisis to investors, fund managers and policy-makers. Design/methodology/approach The Johansen and Juselius cointegration test, Granger Causality test and bivaraite EGARCH model have been applied in this study to examine integration and volatility spillovers between selected stock markets. Findings The findings show that long-term integration between the USA market and South Asian emerging stock markets. It is found that USA stock market has causal relationship with emerging stock markets in short-term. The findings of EGARCH model reveal that asymmetric volatility spillover effects significant in all selected stock markets in pre, during and post-crisis periods. Furthermore, significant volatility spillover is found from stock markets of USA to all selected South Asian markets during and post-crisis periods. However, volatility spillovers from USA to India and Sri-Lanka markets are significant, while insignificant in case of Pakistani market in pre-crisis period. Overall, we find that returns and volatility spillover effects are higher in financial crisis period as compared to non-financial crisis period. Practical implications The findings of this paper have important implications for investors, portfolio managers and policy-makers. They can take potential benefits from international portfolio diversification by considering all these facts. The understanding and knowledge of across volatility transmission help them to maximize the gains from diversification and minimize the risk. Policy-makers can develop such strategies which protect the markets of these economies from future financial crisis. Originality/value Although in finance literature numerous studies have been conducted on integration between different stock markets, most of the studies investigated the integration and volatility spillovers between developed stock markets. However, many studies also analyzed the integration among emerging stock markets in literature review but it is hard to find studies in the context of South Asian stock markets on the effect of global financial crisis on stock markets. The main contribution of this study is to investigate the stock markets integration and volatility transmission between the USA and South Asia by considering the effect of recent 2007 US subprime financial crisis.

The 2008–09 Global Financial Crisis originated from a poor incentive structure in the asset market derived from subprime mortgages. The ultimate bursting and unwinding of an asset bubble (here highly overvalued real estate prices woven into a complex multilayer network of securitization, so called collateralized debt obligations or CDOs) put enormous stress on the financial system, spreading through the global network economy and ultimately resulting in the worst economic crisis since the Great Depression. Economists today agree that the severe economic fallout can be largely attributed to the poor systemic performance of international financial markets. Global macroeconomic imbalances, as well as market failures such as excessive risk taking, misaligned incentives of rating agencies, inefficient liquidity provisions within banks and systemic risk or contagion, i.e., the international and inter-sectoral public goods nature of financial stability, were not sufficiently accounted for by regulation and international macroeconomic policy. This combined financial and economic crisis environment not only put the intrinsic connection between the financial and the real economy back into the spotlight, but also opened up a policy debate about how to ensure macroeconomic and financial stability without jeopardizing microeconomic foundations of the real economy such as competition. In sum, the resulting policy challenge is twofold: First, a new and sustainable balance between free markets, macro industrial policies, and governmental regulation needs to be found in the financial sector, and second, strategic interactions between macro and microeconomic policy goals need to be identified, understood, and balanced. This article will focus on the interaction between macroeconomic crisis management and prudential regulatory responses on the one hand, and competition policy and market structure on the other. We provide a simple economic framework for thinking about the relationship between macro and micro policies as a function of the immediate policy environment, i.e., “extraordinary” financial instability and imminent economic crisis versus “ordinary,” stable economic circumstances. Specifically, we claim that— during severe financial crises—the overall success of policy responses depends on the coordination of three related decisional vectors. First, policy makers must coordinate the responses of multiple regulatory and political actors. Second, they need to follow a systematic, rather than ad hoc, approach that diminishes moral hazard and leaves open a reasonable exit strategy. Finally, policy makers need to consider time consistency. In other words, they need to avoid the temptation to excessively discount post-crisis effects. Overall, this work shall add structure to the ongoing policy debate and provide conceptual guidance for lawyers and economists trying to address the challenges of micro and macro policy integration. In Part I, we provide an overview of the relationship between the financial and real economic sectors and between systemic financial stability and micro-competitive effects. In Part II, we advance our core theoretical proposition—the strategic complementarity of macro and micro policy levers during financial crises. In particular, we demonstrate that policy responses that fail to consider and balance the three key dimensions—coordination among decision-makers, a systematic approach, and time consistency—run the risk of harming both macro and micro-economic well-being in the long run. Finally, in Part III, we illustrate the quite different responses to the financial crisis of the European Union and the United States along the three key dimensions. Our goal is not to provide a comparative assessment of the two systems’ responses or a trans-Atlantic scorecard, but rather to illustrate the possibilities and challenges of coordinating macro and micro responses along the three key dimensions.

In this paper, we are interested in the propagation of the mortgage crisis " subprime " throughout the stock markets of the five developed economies namely the United States, being the country of origin of the crisis, France, Great Britain, Germany and Japan during the period ranging from 03/01/2006 to 25/02/2009, i.e. 778 observations for each country on a daily frequency. To verify the existence of financial contagion, we used the techniques of simple and adjusted correlations and the study of causality and co-integration in order to clarify the relationship of temporal combination and dynamic analysis of residues in series with modeling multivariate GARCH. We have, thus, shown that the relationship that did not exist during the tranquil period, did play an important role during the crisis period, demonstrating a phenomenon of “ pure contagion” and not of " normal interdependencies ".

Cross-border M&A is one of the ways for enterprises to enhance their international competitiveness as soon as possible. Enterprises may gain technology and other excellent resources through cross-border M&A. In 2008, the financial crisis triggered by the subprime mortgage crisis in the United States caused the consumer market to shrink, and a large number of car companies suffered serious losses and faced a huge risk of bankruptcy, so some well-run companies acquired those companies that were on the verge of bankruptcy. This study examines Geely's acquisition of Volvo during the financial crisis and analyzes the impact of the acquisition. According to the analysis, this acquisition has enabled Geely to obtain many advanced technologies and patents, increase market share, and show a growth trend in revenue. However, the large amount of debt in the acquisition process also makes Geely face huge financial risks in the later stage, as well as problems such as corporate culture integration, and overall, this acquisition provides a good foundation for Geely's subsequent development. These results demonstrate the unique features of Geely's acquisition of Volvo under the financial crisis, summarize the impact of the later period, and make recommendations for Chinese enterprises to carry out cross-border mergers and acquisitions..

During the past two decades, financial markets across the globe have experienced sporadic waves of crashes. Such waves raise concerns about the vulnerability of global financial markets and the transmission mechanisms of shocks beyond borders. The current study examines the co-movement of stock markets in BRICS (Brazil, Russia, India, China and South Africa) countries and the United States of America (US). It unfolds their exposure to contagion effects during the major financial crises, which have flared up since 2000. Daily close price indices of selected stock markets were used in this endeavour. These data spanned from 5 January 2000 to 10 March 2021. A wavelet decomposition on stock return series was performed on these data to determine the multihorizon nature of comovement (pure contagion or interdependence) and the dynamics of market integration. It emerges that before the 2006-US-housing-bubble and after the 2011/13-EU-sovereign-debt crises, some shocks caused pure contagion. Such transmission generated short-term shocks. Most of the earlier shocks, particularly the US subprime and the EU Sovereign Debt crises, were spread via interdependence. Trade linkages and economic integration improvements enhanced such interdependence. In addition, when analysing the episodes of market integration, it arises that, in general, the short- and long-term integration strengthened and deepened comovement among equity markets. From the portfolio diversification and risk management perspectives, these results indicate that the market in China provided lucrative grounds for short-run investors from the other countries covered in the current study. These results can be helpful for investors interested in portfolio diversification in the BRICS region. They might also help policymakers in the region mitigate the exposure to external shocks of markets.

This study analyzed the analyze the integration pattern (co-movements) of the international financial markets of 25 countries, in the period from 1997 to 2015, by means of the principal component analysis, applied to the residuals of the VAR-GARCH model. The results showed that, in the subprime crisis period, there was a substantial increase of the integration between the countries, in terms of co-movements of the financial indexes (“contagion effect”), especially for the developed countries. During the review period, Asian countries reached the second position with regard to the percentage of explanation of the variability of returns indices and it the growth of China's participation was observed. Even over time, the economic, political and geographical features seem to be crucial in terms of financial integration by countries.

India's banks had no direct exposure to the subprime mortgage assets. Yet India was affected by the global financial crisis as its economy has significantly integrated with the global economy in the recent past in terms of the globalization of trade and financial integration. The global crisis resulted in a reversal of capital flows to India and a slump in the demand for its exports. This caused a deceleration in growth and the policy response was a fiscal and monetary stimulus that resulted in the fiscal deficit being the highest since 1993–94, the revenue deficit that is the largest ever in India's history, and an aggressive reduction in monetary policy rates. The massive government borrowing programme has resulted in a hardening of the yield on government securities which adversely affects aggregate output. As financial markets have factored in a lack of commitment to fiscal correction, the intentions of the fiscal stimulus have been impeded. The fiscal stimulus lacks sustainability, states Errol D'Souza.

This study investigates the contagion and globalization between the South Asian (Pakistan, India, Bangladesh and Sri Lanka) and five largest economies (US, UK, China, Japan and Germany) stock markets. Daily stock returns data from 1st July 1997 to 30th June 2015 consisting of total 4695 observation is analyzed. DCC GARCH is applied to calculate the conditional correlation coefficients to overcome the issue of heteroscedasticity. Null hypothesis of no globalization got rejected eleven times out of twenty while the hypothesis of no contagion got rejected six times. Further analysis of conditional correlation coefficients confirmed the impact of 9/11 attacks, Subprime mortgage crises and Europeans debt crises on the Indian market. Impact of 9/11 attacks also found on Pakistani and Sri Lankan stock exchanges, while Dhaka stock exchange remained independent of all shocks. In sum, the South Asian stock markets remained isolated from the global shocks except India. Isolation of South Asian stock markets from the global shocks is due to their lower integration with the global markets. This study provides some useful recommendations to the investors and policy makers. Results suggests that Indian stock exchange get contagion impact from the major economies, so authorities of India should have to take measure to decouple the market from the global shocks. The markets of Bangladesh, Sri Lanka and Pakistan are not properly integrated with global financial system, so the authorities of these countries should have to take proper steps to liberalize the markets. This paper presents the first empirical study on financial contagion and globalization of South Asian countries.

<strong>ABSTRACT</strong> Indian&rsquo;s financial system has long been inadequate with an economy worth $ 2 million; the country&rsquo;s financial flaws are increasingly serious. The India&rsquo;s growth story although impacted to a great extent by global factors is equally driven by domestic factors. In view of growing integration with global markets, India needs a strong regulatory framework to prevent and protect against external threat and in the meantime grow its economy significantly. The objective of present paper is to examine the emerging financial sector reforms in the light of ongoing global financial crisis right since US financial crisis and its gradual impact on India in particular. Keeping in view with the above grave dimensions, the present paper is divided into three parts. Part I presents an Introductory background on financial sector reforms in India since emergence of New Indian Economic Policy in 1991 and its gradual sectoral bench marking of reforms at international level particularly US subprime crisis in 2008 and its operation policies implemented in Indian financial sector to overcome the impact of international financial crisis. Part II mainly concentrate on Indian financial sector and its benchmarking of reforms in connection with strong operational condition, the weak grounds, the opportunities and the impending threat on re-emergence of International Financial Crisis. Part III highlights the present and future policy perspectives of Indian financial sector reforms and its impact on service sector of Indian economy. The last part provides aggregative conclusion and some effective line of direction to keep Indian financial sector to its positive health from the angle of future. <strong>Key words: </strong>Economic Policy, financial flaws, Financial Crisis

Subprime mortgage crisis, also known as the subprime mortgage crisis. The crisis initially emerged from the US real estate market, and spread to other related markets at an alarming speed, and had a significant impact on the global financial markets, the financial system. Based on the knowledge learned in the course and the relevant materials of extracurricular supplement, this paper starts from the outbreak process of the subprime crisis, focuses on the internal and external causes of the subprime crisis, and combined with the subprime crisis events, thinking about its enlightenment to the financial development of China.

This paper delves into an examination of the three primary interrelated factors that precipitated the subprime mortgage crisis: regulatory deficiencies, policy failures, and dysfunctional innovation. Furthermore, it conducts an analysis of the underlying factors that exacerbated the ramifications of this economic upheaval: the excessive proliferation of securitization, a deficiency in market transparency, inadequate risk management practices within financial institutions, and challenges associated with credit rating agencies. The subprime mortgage crisis has incited extensive discourse across diverse sectors, notably encompassing two pivotal dimensions: firstly, inquiries surrounding the transparency of assets and, secondly, predicaments pertaining to governmental intervention for market stabilization. This article undertakes a comprehensive categorization and in-depth exposition of these discrete issues, proffering meticulous explications corroborated by empirical substantiation. Culminating in its denouement, the article proffers prudent recommendations aimed at preemptively mitigating the advent of future crises. The entire discourse endeavors to maintain an objective and truthful perspective, aiming to explore the fundamental nature of the subprime mortgage crisis rigorously.

The subprime crisis is widely recognized as the most extensive and impactful financial crisis since the 21st century. The stock market at that time was the most affected area. This article uses the PEST analysis framework, examining the subprime crisis from political, economic, social, and technological perspectives to understand how the stock market was affected and what were the main causes. Based on the study, it can be concluded that the main political cause of the subprime crisis was the Federal Reserves missteps in policy. The primary economic causes were the lowering of borrowing thresholds and the bursting of the housing bubble. Lack of risk awareness among American investors was a significant social factor contributing to the crisis. The technical shortcomings of subprime financial products were also a critical factor. The impact of the subprime crisis was multi-faceted. Politically, it led to a decline in social credibility for the US government. Economically, it resulted in the rise of economic protectionism and catch-up economies. Socially, it contributed to high youth unemployment and increased essential spending for low-income families. Technologically, the subprime crisis accelerated the development of the fourth industrial revolution.

This study examines the dynamics of volatility Spillover among the US and emerging Asian Stock markets (China, Pakistan, India, Malaysia and Korea) amid the COVID-19 pandemic. The analysis used data of daily stock returns and the time period is divided into two phases: pre and during COVID-19. The pre period is from November 1st, 2017 to November 30th, 2019 and during period is from December 1st, 2019 to December 31st, 2021. The pre-period has been taken for comparative purpose. The Spillover index method provided by Diebold and Yilmaz (2012) is use to check these dynamics. The findings indicate the presence of integration and the asymmetric volatility Spillover among these sampled stock markets. The transmission pattern of volatility Spillover is bidirectional. The Korean Composite Stock Price Index (KOSPI) is the only market that transmitted less and also received less volatility Spillover from other stock markets. 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This paper examines the evolution of China's present real estate market and the illumination of the American subprime mortgage crisis through an analysis of the latter. The article explains and analyzes the causes of the subprime crisis, and then discusses its impact on the American real estate industry at that time. Subsequently, through the analysis of the supply and demand of the Chinese real estate industry, it is believed that China's real estate sector has three related points to the American real estate industry during the subprime crisis. Firstly, the excessive confidence in the US market and the large population of some cities in China. Secondly, the financial derivatives and the management of them in the US market and the Chinese market. Thirdly, the excessive issuance of personal credit in the US market and the loose regulation of property companies in the Chinese market. At the end of the paper, based on the experience learned from the US subprime mortgage crisis and taking into account the position of the Chinese real estate market today, preventive measures and countermeasures are put forward to provide a reference for future risk prevention.

Since the Great Depression, the U.S. has had only one more catastrophic economic crisis than the one that began in 2008.The economic crisis not only dealt a decisive blow to the economic development of the United States but also affected most countries in the world, causing substantial financial losses to many countries. The lessons of history can be learned by studying and analyzing historical events. This paper's main goal is to explain the causes of the financial crisis in terms of lax monetary policy, the lending environment, subprime mortgages, and credit default swaps (CDS), as well as to provide examples of the effects of the financial crisis by examining the perceptions and analyses of well-known experts and scholars. Next, this paper analyzes the market and government methods and policies in response to the crisis in terms of several acts of the D-Act housing market, central banks, Basel III-CAR capital adequacy ratio, and the COVID-19 crisis. The reasons for this financial crisis's outbreak and the implications for the market, government, and regulators to be summarized and reflected are explored comprehensively in this paper.

The subprime crisis is a financial calamity brought on by subprime mortgage companies going bankrupt, investment funds being forced to close, and major stock market shocks. At the start of this century, the US stock market, real estate market, and other asset markets experienced a number of asset bubbles due to excess liquidity, house purchase policy stimulus, financial innovation, and other factors. Along with the tightening of monetary policy, the weakening of the US housing market, and particularly the rise in short-term interest rates, the interest rate for repaying subprime mortgages surged considerably. At the same time, buyers find it challenging to sell their homes or refinance utilising mortgage housing because to the ongoing cooling of the housing market. Due to the failure of many subprime borrowers to make scheduled loan repayments and the failure of banks to sell their properties at high prices, which resulted in significant losses, the subprime crisis was directly caused by these events. Most people agree that the absence of a mechanism for financial monitoring was a major factor in the crisis. The United States has accelerated the adoption of neo liberal economic policies during the past three decades, which is one of the primary causes. However, more than ten years after the United States stabilised the financial system through monetary, fiscal, financial, and other measures, the global economy has been hit considerably more severely and has not yet fully emerged from the shadow of the crisis.

This research explains and analyzes how the Subprime Crisis happened in 2008 and how the crisis impacted the market and policy in America. The causes are unfolded from three perspectives. First reason is that government adopt a low interest rating, aiming at increasing the house affordability. Second, excessively innovative financial products, such as MBS, and credit rating agencies lead to even more unlimited loans with poor quality. Third, the complex commercial chain behind mortgage products enlarged the range of the crisis’s influence, which is triggered by government increasing the interest rate. The meltdown of subprime commercial chain brings a series damages: house market bubble burst, banks and businesses broken, rapidly decreasing employment rate, etc. To control the continuing damages from the collapse of mortgage market, the US government begins to intervene the market by promulgating laws, including Dodd-Frank legislation and Basel III to regulate and restrict businesses’ and banks’ behaviors.

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.

ABSTRACT: This essay describes implications of the subprime crisis for accounting. First, I overview the institutional and market aspects of subprime lending with the greatest accounting relevance. Second, I discuss the critical aspects of FAS No. 157’s fair value definition and measurement guidance and explain the practical difficulties that have arisen in applying this definition and guidance to subprime positions during the crisis. I also raise a potential issue regarding the application of FAS No. 159’s fair value option. Third, I discuss issues that have arisen regarding sale accounting for subprime mortgage securitizations under FAS No. 140 and consolidation of securitization entities under FIN No. 46(R) associated with mortgage foreclosures and modifications. Fourth, I indicate ways that accounting academics can address the implications of the subprime crisis in their research and teaching.

The 2007-2009 financial crisis, considered the worst crisis in human history since the Great Depression of the 1930s was not expected to end the period of the Great Moderation when financial and economic stability lasted from the mid-1980s to 2007. Although more than a decade has passed since the crisis, the analysis of the causes and consequences of the 2007-2009 financial crisis remains relevant for today's global economy, which is affected by both COVID-19 and the war in Ukraine. The crisis came as a surprise to almost everyone, but its roots were already in the U.S. financial system a decade ago. The explosion of the housing market in the United States at the beginning of the 21st century attracted a large number of banks and financial institutions to invest. The immediate cause of the financial crisis was the Federal Reserve's monetary policy, inflation in subprime mortgages, and the abuse of credit default swaps. The financial crisis also triggered a large number of banks to go bankrupt due to insolvency or default, and after the collapse of Lehman Brothers, the US government had to use a large number of emergency funds to bail out the market. These bailouts largely saved these too-big-to-fail companies and had no significant effect on the years of high unemployment.

This article discussed the origin, process, and consequences of the subprime mortgage crisis that occurred mainly during 2008, in addition to the further improvement of policies by the American government to prevent the occurrence of a similar crisis in the future. Overall, the subprime mortgage crisis was primarily caused by expansionary monetary policy, lax regulation, and securities such as credit default swaps. Following the collapse of the housing bubble and the resulting turmoil in the credit market, the crisis led to bankruptcy for investment banks and other companies, significant financial losses, recession, unemployment, and a substantial amount of government bailout funds. In response to the crisis, the U.S. government implemented several policies to regulate the financial market and reduce risk for banks. Two of the most well-known policies are the Dodd-Frank Act and Basel III, which aim to regulate the financial market and banking system. These regulatory measures were enacted to enhance transparency, strengthen risk management practices, and foster greater stability in the financial system, marking a pivotal shift in the aftermath of the subprime mortgage crisis.

The "subprime crisis" refers to a situation that occurred in the United States in which investment funds were compelled to close due to the bankruptcy of subprime mortgage institutions, causing stock market volatility brought on by the financial storm. This situation occurred between 2006 and 2009 and is referred to as the bubble economic crisis. It caused a liquidity crisis in the major financial markets around the world. In the spring of 2006, the "subprime mortgage crisis" in the US started to manifest. The Taylor rule argues that expansionary monetary policy is the cause. The housing bubble in the United States and expansionary monetary policy are the subjects of this essay. As a result of the analysis of related phenomena, this paper concludes that the subprime crisis is caused by expansionary monetary policy.

Securitization means the change of non-liquid assets into securities. This topic has become more popular, mainly due to the U.S. subprime mortgage crisis. In this article, an analysis is given of the current situation in financial markets and the changes, which were implemented from the first days of subprime crisis. Also mentioned is the impact the crisis has had on securitization development. Part of the article is devoted to the situation on the Polish financial market. It is quite a new market and it is susceptible to such crises. The Article presents the part played by securitization in the Polish financial market and the circumstances for its growth in the near future. It also covers the latest information related to financial market regulations, which could have direct or indirect impact on the quantity and value of securitization transactions.

This paper provides insight into what caused the decline of the adjustable-rate mortgage (ARM) market during the 2007&amp;ndash;2009 financial crisis. Contrary to common perception, the failure of the ARM market cannot be primarily attributed to predatory lending targeting subprime borrowers from low-credit households. This popular narrative is incomplete and disregards some important factors. I present three key factors that challenge the narrative and point to previously undiscussed sources that may have contributed to the ARM market collapse. First, the accusation of predatory lending does not account for other possible causes of mass ARM defaults. Second, the sole focus on the market&amp;rsquo;s subprime segment disregards the impact of prime ARMs on the market. Third, the narrative&amp;rsquo;s citation of subprime ARMs having greater delinquency rates and foreclosure numbers fails to recognize the significant percentage increase in prime ARM failures in the years leading up to the crisis, as well the disparity in typical outstanding balances between subprime and prime ARMs.

After the dot-com bust, the U.S. experienced growth in the housing industry: oversupply of capital, low-interest rates, and deregulated financial system. Financial firms, led by banks, rode on a robust macroeconomic atmosphere. The freedom brought by financial deregulation was taken out of context among the firms in the financial system, resulting in the establishment and widespread use of collateralized debt obligations (CDOs) and mortgage-backed securities (MBS) (CDO); these were unconventional investments for the general populace. In retrospect, the U.S. government limited banks’ participation in private-labeled asset-backed securities to tame interest rates, liquidity, and credit risks only to be loosened the following years by Congress through amendments to the existing laws. Deregulation of the banking system encouraged banks and thrift banks to engage in real estate businesses, which paved the way for the rise of the subprime market. The subprime market grew alongside the prime market due to banks’ circumvention of borrowers' creditworthiness. The domino effect began from the failure of the subprime borrowers to repay. Vertically integrated banking giants felt the heavy blow of loan default, which caused their insolvency. Since then, the whole financial system has collapsed entirely. An increase in job losses, a rise in homelessness, business closures, and U.S. negative growth ensued. Through the TARP program, the Dodd-Frank Wall Street Reform and Consumer Protection Act, and quantitative easing.

The purpose of this study is to investigate the performance of syariah and conventional stock market in Indonesia. This paper uses Jakarta Islamic Index (JII) to represent syariah stock market and Jakarta Composite Index (JCI) to represent conventional stock market. The Treasury bill rate and the MSCI World index are used as risk free rate and stock market benchmark. Daily data were divided into five periods such as pre-asian financial crisis, during asia financial crisis, pre-subprime mortgage financial crisis, during the subprime mortgage financial crisis, and full sample period. We use three risk adjusted performance measures: Sharpe ratio, Treynor ratio, and Jensen alpha. This study shows that the conventional stock market produced more return compared to syariah in all sample periods.Key words: Islamic stock market; conventional stock market; Sharpe Ratio, Treynor Ratio, Jensen alpha

Subprime lending in the United States was a major concern after the 2008 financial crisis. While Covid-19 is sweeping the world, how will the US government and financial institutions deal with the potential crisis of subprime mortgage will be discussed in this study. Financial market institutions and the US government should both change their strategies to deal with the crisis. In addition to controlling the spread of the epidemic, the US government should temporarily lower the minimum wage and provide a series of quantitative financial subsidies. Financial institutions should also update loan data and use better monitoring and regulation to reduce subprime risk to cope with this potential crisis.

The subprime crisis of the late 2000s had a profound impact on the global financial system, triggering an economic downturn of unprecedented magnitude. This paper provides a comprehensive analysis of the causes, consequences, and lessons learned from the subprime crisis. The crisis emerged from a combination of factors, including the expansion of subprime mortgage lending, relaxed underwriting standards, and the bursting of the housing bubble. Financial institutions eagerly pursued higher profits by issuing mortgage loans to borrowers with questionable creditworthiness, leading to a surge in loan defaults and foreclosures when the housing market collapsed. The consequences of the crisis were far-reaching. It resulted in widespread financial turmoil, with significant losses incurred by interconnected institutions worldwide. The global economy experienced a severe recession, characterized by high unemployment, declining consumer and investor confidence, and disruptions across various industries. The subprime crisis highlighted critical weaknesses in risk management practices, regulatory oversight, and financial market mechanisms. However, it also served as a catalyst for reform. Policymakers implemented measures to strengthen financial systems, enhance transparency, and improve risk assessment and management. Revisions to regulatory frameworks, stricter stress testing, and reinforced consumer protection measures were among the responses.

Abstract This paper analyses the structural changes of the underlying stock and currency markets as well as the industrial productions by using a minimum spanning tree graph on a Central and East European sample. The aim is to point out the similarities and differences of the COVID-19 pandemic compared to previous recessions, namely the Dot-com crisis in the early 2000s and the Subprime crisis around 2008. Focusing on the incidence, closeness, and betweenness properties of the graph, we are looking for the emergence of a shock-propagating hub. We identify such a hub during the Subprime crisis but not during the COVID-19 pandemic, which points to the higher efficiency of the economic policy to absorb the worst effects of the crisis.

The US subprime mortgage crisis is a major crisis in the global financial market in recent years, its scope far beyond the United States, China as the world's second largest economy real estate market has a profound impact. Based on the analysis of Shenwan real estate industry index and the development characteristics of Chinese real estate market, this paper discusses the impact mechanism and consequences of the crisis on Chinese real estate market, and uses GRACH(1,1) model for empirical analysis and test. Through analysis, it is found that the occurrence of subprime crisis has a significant negative impact on Chinese real estate industry, which inhibits the development of Chinese real estate industry to a certain extent. At the same time, Chinese real estate sector is sensitive to market fluctuations. Finally, some relevant policy suggestions are put forward.

Purpose – The purpose of this paper is to examine whether China is still a passive price taker from the US soybean futures, or instead domestic futures market has developed certain degrees of pricing power through time. The finding helps to identify the importance of China soybean futures in the perspective of portfolio selection for international futures traders. If China soybean futures market is no longer a price taker after the subprime crisis, traders need to include it as a separate category in their portfolio. Design/methodology/approach – This paper uses exponential generalized autoregressive conditional heteroskedasticity-generalized error distribution (EGARCH-GED) and generalized autoregressive conditional heteroskedasticity-generalized error distribution (GARCH-GED) models to test spillover effects between Dalian Commodity Exchange (DCE) and Chicago Board of Trade (CBOT) soybean futures. The authors divide daily samples into three subperiods based on the subprime crisis. Three research questions – whether China is still the price taker, the importance of Chinese soybean futures in international futures portfolio selection, and the influences of subprime crisis on soybean futures volatility relationship – are examined by comparing estimation results through time and different contracts. Findings – The spillover effect from CBOT soybean futures to DCE No. 1 soybean futures becomes weaker through time. China is no longer a soybean futures price taker after the subprime crisis. The authors also find the shocks of bearish news on DCE soybeans are greater than those of bullish news. Potential volatility of DCE in long positions is bigger than that in short positions. Practical implications – China is the largest soybean importer. DCE is a very important futures market for non-genetically modified soybeans. It is necessary for both international and domestic futures traders to understand the changes in international soybean futures price relationship and take corresponding strategies. It is also important for market to realize that DCE soybean futures are to a less degree price taker after the subprime crisis. Originality/value – The paper applies EGARCH-GED and GARCH-GED models to identify changes in spillover effects before, during, and after the subprime crisis. Different from other studies, this paper finds after the subprime crisis, China is no longer the soybean futures price taker. This paper also compares the spillover effects of non-genetically modified soybean futures (No. 1 soybean futures) with genetically modified soybean futures (No. 2 soybean futures).

This paper examines the reasons behind the financial crisis of 2008, its effects, and the subsequent developments. At that time, the federal government's monetary policy promoted subprime loans, and credit default swaps were derived based on subprime loans. This series of reasons led to a huge bubble in the real estate market and directly caused the subprime mortgage crisis. Companies are closing one after another, unemployment and inflation are rising, and people's lives are getting more complex. To survive this crisis, the government passed pertinent legislation to support economic growth, and banking regulators corrected these laws to stop a repeat of the subprime mortgage crisis. Nowadays, the outbreak of the COVID-19 epidemic and the conflict in Ukraine have brought the world economy into trouble again. As a result, the 2008 financial crisis study is crucial to understanding modern society because it can be used to prevent future financial crises and effectively address economic problems.

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.

This study discusses the 2008 subprime mortgage crisis's causes, housing and financial sector changes, and long-term effects. It forms the basis for real estate market regulation and risk mitigation. The research analyzes the causes of the crisis, including subprime loans, complicated financial derivatives, and lax regulatory monitoring. The problem is also linked to an overheated real estate market and loose credit policies. The crisis period is then examined, including housing price declines, sales volume declines, mortgage default increases, and foreclosure increases. It compares impacts across geographies and housing types, including apartments and single-family homes. Financial institution responses and policy changes are then examined. The study finishes with city or community case studies showing market dynamics post-crisis. The findings can help policymakers and financial institutions navigate the housing market and avoid future catastrophes.