Abstract
The US subprime crisis was rooted in a combination of financial deregulation and monetary policy oversight amid two decades of financial liberalisation in the 1980s and 1990s. Financial deregulation backfired and was manifest in twenty years of risky practices in lending and borrowing, securitisation of home loans and regulatory oversight. The bursting of the US housing bubble triggered the subprime crisis and spread it across the world. Securitisation on the back of loose regulations allowed banks to broadly distribute risks to investors, including banks, individuals, financial firms and hedge funds, who eventually suffered significant losses when mortgage payment defaults soared.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
Author information
Authors and Affiliations
Copyright information
© 2009 Chi Lo
About this chapter
Cite this chapter
Lo, C. (2009). The Basics of the ‘Financial Tsunami’. In: Asia and the Subprime Crisis. Palgrave Macmillan, London. https://doi.org/10.1057/9780230251137_2
Download citation
DOI: https://doi.org/10.1057/9780230251137_2
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-31435-5
Online ISBN: 978-0-230-25113-7
eBook Packages: Palgrave Economics & Finance CollectionEconomics and Finance (R0)