An Analysis of the Financial Crisis of 2008: Causes and Solutions
Oakland University - School of Business Administration
November 4, 2008
This research evaluates the fundamental causes of the current financial crisis. Close financial analysis indicates that theoretical modeling based on unrealistic assumptions led to serious problems in mispricing in the massive unregulated market for credit default swaps that exploded upon catalytic rises in residential mortgage defaults. Recent academic research implies solutions to the crisis that are appraised to be far less costly than a bailout of investors who made poor financial decisions with respect to credit analysis.
Number of Pages in PDF File: 28
Keywords: financial crisis, credit default swap, bailout, foreclosure, short sales, systematic risk, default risk, credit spread
JEL Classification: G11, G12, G13, G14
Date posted: November 4, 2008 ; Last revised: December 16, 2008