The 2007 credit crunch phenomenon

Résumé du document

Finance coursework about the credit crunch phenomenon and the subprime crisis. Written by a French native speaker.

Extraits

[...] Therefore we need method to overcome the credit crunch. HOW THOSE FACTORS MAY BE OVERCOME? The factors leading to a credit crunch seem to be closely related to the credit cycle and to the state of the economy. The measures using to overcome the credit crunch, it needs to act both on the economy and also on the capital market as it has always a vital role to the economy. First, the government and central banks need to ease liquidity on the market and also the credit. [...]

[...] (2006) Des CDO full structures aux CDO single tranche: évolution des structures”, Revue Banque et marchés , No Septembre/Octobre Fitch Ratings (January 2006) 2006 Global Structured Finance Outlook: Economic and Sector-by-sector Analysis. Credit Policy. Freeman M.C. and Cox R.P. and Wright B. (2006) Credit Risk Management : The use of credit derivatives by non-financial corporations Managerial Finance, Vol No pp 761 773 Gibson, M.S. (2007) Credit derivatives and risk management , FRBA Economic review, Fourth quarter Grant, T (2007), The credit crunch: How did it happen and where do we go from here?, December 2007, Pittsburgh Post-Gazette. [...]

[...] This kind of loan is more likely to suit companies that often need loans. However, this kind of contracts is not really used by small firms or small loan's borrowers and they are the more likely to be rationed if a credit crunch appears. (Morgan, 1990) WHAT ARE THE MAIN TYPE OF FINANCIAL INSTRUMENTS USE TO DEAL WITH CREDIT RISK? The market participants and especially the banks have improved for years their credit risk management using methods such as loan diversification, collateral agreements, netting . [...]

[...] Firstly the subprime crisis in the USA is at the heart of the current credit crunch. Indeed banks and credit organisms provided mortgage for people who wanted to purchase their home even if they had risky credit ratings. Broker of mortgage likely thought it is attractive to do more mortgage because the more mortgages they generate the more commission they got. Moreover lenders granted loans to borrowers without seriously analysing their financial ability to repay the debt (Grant, T., 2007). [...]

[...] and McAdie R. (2001) Trading the default swap basis” , Sponsored Article Lehman Brothers Owens, R. & Stacey L., (1995), Identifying credit crunches. Contemporary Economic Policy. Huntington Beach: Apr. Vol Iss. p Quemard J.L (2003) Dérivés de crédit in Mise en place d'un environnement sécurisé, Revue banque édition, pp 75-88. Warren, B., (2003) Buffett warns on investment time bomb.BBC news. Published on Tuesday March Yoon-Dae & Jay H. R. (2007), Lessons from the Korean Crisis: Policy and Managerial Implications. [...]