The Global Financial Crisis 2007-2009: A Survey

Abstract

The goal of this survey is to summarize the 2007–2009 Global Financial Crisis (GFC) main reasons and consequences. The GFC originated in developed countries and it was the first major financial crisis of the twenty-first century. From the United States perspective, the following four major events determined the GFC course: (1) the increase in subprime delinquency rates in the spring of 2007, (2) the liquidity crunch in late 2007, (3) the liquidation of Bear Stearns in March 2008, and (4) the bankruptcy of Lehman Brothers in September 2008. The GFC began in the U.S. but not all financial markets were affected by the crisis at the same time and to the same extent. The GFC periods were different in various countries. Therefore, the additional aim of this study is to gather the research results regarding the GFC periods within the world. Moreover, the research topics concerning stock market cross-correlations, contagion, integration, and globalization effects are often attributed to the impact of the GFC. Unfortunately, financial crises tend to repeat. For instance, the European markets have suffered from the subsequent financial crises since late 2009. Recently, financial markets in the world have been deeply affected by the COVID-19 pandemic crisis period.

Keywords: stock market, crisis, market states, cross-market correlations, contagion, integration, globalization

JEL Classification: [C10, F36, F44, F65, G01, G15, O50