Essay on Finance Course Reflection

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The three most important things that I learned in this course are as follows: 1) Causes of Financial Crisis Financial crises have influenced the os of financial markets in past. The most important the Great Depression in 1929-30, the 1970s inflation failures and the banking difficulties in the 1990s led to problems in the financial markets causing serious disturbance. The recent financial crisis which became known in 2007, though the roots were implanted much earlier, has been the worst situation financial markets have ever faced. Causes of the Financial Crisis Several financial statements have been prepared to describe the causes of this current financial failure. There are a variety of factors that has resulted in the explosion of…show more content…
The real estate bubble and the successive collapse The US housing market observed great boom throughout 1997-2005 era due to too much lending by banks along with the low interest-rate. US house prices got higher by 124% and British house prices rose by 194% in the phase 1997 and 2006 (Meltzer, 2009). The changes were similar in other nations in Europe and Asia too. In the US home proprietorship rates increased for all districts, all age ranges and all income parties during this phase. The US government supported home ownership with objective of an indicator of good governance. Levels of Debt and Incentive Structures The quantity of due balance taken by commercial and investment banks increased vastly led the way to the financial disaster. A change in the legislation in the US permitted investment banks to receive increased levels of debts with the purpose that they could spend in the lucrative mortgage sponsored securities. These firms mostly utilized financial leverage by borrowing at lesser interest rates and investment in higher interest allowing mortgage based resources. Top 5 US investment banks, which are presently failed, had more or less unpaid total of 1.4 trillion US$ in 2007 which is roughly 30 percent of the amount of the US financial system (Meltzer, 2009). How did it all go wrong? In the initial

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