The financial system played a leading role in the global economic crisis in the year of 2007. The list of possible explanations is long: deficient regulatory structures, conflicts of interest, economic deterioration of middle-income families, a wrong monetary policy, incorrect economic models and many more factors have been named. However, is it possible that in this discussion of the causes of the global financial crisis 2007 we are neglecting a more profound question? Is it possible that the GFC is evidence of the failure of a whole financial system? This essay will analyse if the GFC represents a systemic failure of market-based finance.
The thesis statement of this essay is that the GFC does not represent a systemic failure of market-based finance. To prove this I will first compare market-based finance and bank-based finance. Subsequently, the GFC will be explained. I will then give an overview on the effects of the GFC in market and bank-based financial systems. Next, I will discuss the relationship between market-based finance and the GFC. Finally, the resulting policy implications will be stated.
Inhaltsverzeichnis (Table of Contents)
- Introduction
- Comparison of market-based finance and bank-based finance
- Explanation of the GFC
- 1
- 2
- 3
- 4
- The Effects of the GFC in market-based systems and bank-based systems
- The relationship between market and bank-based finance and the GFC
- Policy Advice
- Conclusion
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This essay aims to analyze whether the Global Financial Crisis (GFC) of 2007-09 represents a systemic failure of market-based finance. The essay will compare market-based and bank-based finance, explain the causes of the GFC, explore its effects on different financial systems, and discuss the relationship between market-based finance and the crisis. Finally, it will examine the resulting policy implications.
- Comparison of market-based and bank-based finance
- Causes and characteristics of the GFC
- Effects of the GFC on different financial systems
- Relationship between market-based finance and the GFC
- Policy implications of the GFC
Zusammenfassung der Kapitel (Chapter Summaries)
- Introduction: The essay introduces the GFC and the thesis statement arguing that the GFC does not represent a systemic failure of market-based finance. It outlines the essay's structure, including a comparison of market-based and bank-based finance, an explanation of the GFC, and an analysis of its effects and policy implications.
- Comparison of market-based finance and bank-based finance: This chapter will provide a comparative analysis of the two main financial systems, highlighting their differences and potential advantages and disadvantages.
- Explanation of the GFC: This chapter delves into the causes and contributing factors of the GFC, exploring various perspectives and potential explanations.
- The Effects of the GFC in market-based systems and bank-based systems: This chapter will analyze the impact of the GFC on both market-based and bank-based financial systems, highlighting the specific challenges and consequences experienced in each system.
- The relationship between market and bank-based finance and the GFC: This chapter will explore the interconnectedness between market-based finance and bank-based finance in relation to the GFC, examining how they influenced and interacted with each other during the crisis.
Schlüsselwörter (Keywords)
The essay focuses on the Global Financial Crisis of 2007-09, market-based finance, bank-based finance, financial systems, systemic failure, policy implications, regulatory structures, and economic models. It aims to examine the relationship between these concepts and the GFC, providing a critical analysis of the events and their broader implications.
Frequently Asked Questions about the 2007 Global Financial Crisis
Was the GFC a systemic failure of market-based finance?
The essay argues that the crisis was not a failure of the system itself, but rather a result of deficient regulatory structures and incorrect economic models.
What is the difference between market-based and bank-based finance?
Market-based systems rely more on securities and capital markets, while bank-based systems focus on traditional banking institutions for financial intermediation.
What were the main causes of the 2007 crisis?
Key factors included subprime mortgage failures, wrong monetary policies, conflicts of interest, and the deterioration of middle-income family finances.
How did the GFC affect different financial systems?
The crisis had widespread effects, but the impact varied depending on whether a country's system was primarily market-based or bank-based.
What policy implications resulted from the GFC?
The crisis led to calls for stronger regulatory frameworks and a reassessment of economic models used to predict market stability.
- Quote paper
- David Höhl (Author), 2018, Was the crisis of 2007 a systemic failure of market-based finance?, Munich, GRIN Verlag, https://www.grin.com/document/465436
