ABSTRACT

Almost everyone was affected by the 2007-2010 global financial crisis in one way or another. While there have been numerous studies that have explored the causes behind such global financial crisis, this subject proves to be a rather significant matter as it is still an ongoing crisis that had hit the Western countries directly causing massive layoffs. Indeed, many people have predicted such crisis would require a substantial amount of time for it to subdue. However, we do not know just how bad the current credit crisis will get. Therefore, this study attempts to rectify the whole scenario in the literature. This research aims to analyze the causes, implications and impact of this global financial crisis towards the world economy and through this information, we should be able to clear any doubts and discontent one has on this matter.

TABLE OF CONTENTS
ABSTRACT ………………………………………………………..………..…………………...ii

ACKNOWLEDGEMENT……………………………………………….……………….………iii

TABLE OF CONTENTS ………………………………………………………………………..iv

CHAPTER 1: INTRODUCTION………………………………………………………………1

CHAPTER 2: RESEARCH ANALYSIS………………………………………………………2

2.1 THE GLOBAL FINANCIAL CRISIS OF 2007-2010……………………………………….2

2.2 CAUSES……………………………………………………………………………………....3

2.2.1 US HOUSING BUBBLE AND FORECLOSURES………………………………. 3

2.2.2 SUBPRIME LENDING……………………………………………………………..4

2.2.3 INACCURATE CREDIT RATINGS……………………………………………….5

2.2.4 MORTGAGE UNDERWRITING…………………………………………………..6

2.2.5 SHADOW BANKING SYSTEM…………………………………………………...7

2.2.6 INCREASED DEBT BURDEN AND OVERLEVERAGING……………………..9

2.3 IMPACT……………………………………………………………………………………10

2.4 FUTURE OUTLOOK………………………………………………………………………..12

CHAPTER 3: CONCLUSION

3.1 RECOMMENDATIONS AND SOLUTION……………………………………………….14

3.2 CONCLUSION…………………………………………………………………………..…..16

INTRODUCTION

Many questions were raised