This website uses cookies to ensure you have the best experience. Learn more

Coporate Institution And Corporation Essay

2919 words - 12 pages

Table of Contents
1. Executive summary 2
2. Introduction 3
3. Body 3
3.1 Analysis of causes of the crisis 3
3.1.1 Housing bubble and subprime mortgage crisis 3
3.1.2 Global imbalance 4
3.1.3 Financial Innovation 5
3.2 The impacts of this global financial crisis 5
3.2.1 Impact on the world economy 5
3.2.2 Impact on stock market 5
3.2.3 Impact on manufacturing activity 6
3.2.4 Impact on developing countries 6
4. Conclusion and lessons learned from the crisis 8
5. References 10

Executive summary

The global financial crisis in 2008 has led to one of the biggest recessions spread all over the world. It caused a considerable slowdown in almost all ...view middle of the document...


1 Analysis of causes of the crisis

In fact, there are many different causes which led to this global financial crisis; however the main causes are the US housing bubble, the world imbalance and the financial innovations.

1 Housing bubble and subprime mortgage crisis

The housing bubble is an economic bubble taking place in real estate markets (Bianco, 2008). It is considered as one of the primary cause to the global financial crisis. In fact, the main cause of housing bubble in US was the stock bubble in mid 90s. With the rise up in stock price, people were able to increase their wealth fare, and wanted to spend their new stock wealth on housing. It led to a sharp increase in housing demand in the market (Beker, 2008).

Another reason which resulted in the rise in demand for house was the subprime mortgage. Subprime mortgage is one type of mortgage which granted to individuals with low credit histories (often below 600). The most popular structure of subprime mortgage is adjustable rate mortgage (ARM) in which a fixed interest rate is charged at first, then convert to a floating rate based on the index like LIBOR plus specific margin (Investopedia, 2011). Because the initial interest rate is low, the borrowers are misled that the subprime mortgage is more affordable. However, when the interest is reset to variable rate, the payment for this mortgage would increase dramatically. This is the reason why there was a significant increase in subprime mortgage.

The high demand in housing led to increase in price. With the expectation that the price would continue to increase, the homebuyer did willing to pay far more than the actual price, created a housing bubble (Baker, 2008).

However, this bubble started to burst in 2007, when housing boom resulted in too much over supply that the prices could not hold up anymore. In fact, the prices reached its peak and then started to fall through 2008. After this turning down, there was an increase in the default rates in subprime market. The reason was that, the subprime mortgage borrowers are people with low income, and low credit history; thus when the house price dropped and they did not have ability to meet the payment, they had to default on the mortgages. When the defaults were spread, the valuation of MBS decreased sharply, the subprime mortgage was in crisis; led to the hit to financial market (Baker, 2008).

The US financial market was exhausted with widespread financial panic when the US Government informed the nationalization of Fanny Mae and Freddie Mac on September 7, 2008; and the largest bankruptcy of Lehman Brothers on September 15, 2008 (Naude, 2009). Lending between financial institutions and banks was cut off sharply, and the interest rate was increased rapidly. In order to raise fund, the financial institutions had to sell the assets, which led to price crash for equity and bond (Liefert and Shane, 2009).

Because the financial markets...

Other Papers Like Coporate Institution and Corporation

The Johns Hopkins University Model Clinical Trial Agreement

3786 words - 16 pages “Agreement”) is entered into as of this ______ day of ______, 20____ (the “Effective Date”) by and between: THE JOHNS HOPKINS UNIVERSITY, having a School of Medicine with an Office of Research Administration located at 733 North Broadway, Suite 117, Baltimore, Maryland, 21205 (the “Institution”), employer of ________________ (the “Investigator”), and [SPONSOR NAME IN ALLCAPS], a corporation organized under the laws of the State of

"The Corporation" Essay

526 words - 3 pages The motion picture, "The Corporation", explores the nature and spectacular rise of the dominant institution of our time. Illuminating the grip of corporations on our everyday lives using footage from TV, news, advertising and pop culture, the filmmakers accomplished what many fail at - being both informative and entertaining at the same time. Provocatively using the corporation's legal status as a person to classify it as more than a person, but

Banking Law

1710 words - 7 pages carrying out its functions. The fund is established under section 20 of the Kenya deposit insurance act and vests it in the corporation to be administered by the board. Section 23 of the same goes ahead to state its application which among others include: to meet payments in respect of insured deposits. The membership of the fund is found under section 24 of the act, which states that any institution licensed by the central bank shall be deemed to

Bitter Gourd

2289 words - 10 pages Bank of the Philippines (DBP, secondary government bank) * Security Bank * Chinabank * Rizal Commercial Banking Corporation (RCBC) * Union Bank of the Philippines (Unionbank) * Citibank * United Coconut Planters Bank (UCPB) * EastWest Bank * The Hongkong and Shanghai Banking Corporation (HSBC) * Philtrust Bank * Asia United Bank (AUB) * Bank of Commerce * Maybank Philippines, Inc. * Philippine


640 words - 3 pages Me and my project mate have selected Commercial Bank of Dubai (CBD) among other banks to study about the nature of strategic planning in this corporation because it’s one of the oldest local banks, one of the strongest banks in the private sectors in the UAE and its rich in history. CBD has strong trade finance and wide range of retail and corporate banking products and services. First of all we have studied the strategic planning tools and

October at @Gmail

977 words - 4 pages Bank, any depository institution, the Federal Deposit Insurance Corporation (FDIC), or any agency of the United States. The Product may involve investment risk, including potential loss of principal. Approval and terms of your loan are not conditioned upon your purchase of the Product from USAA Federal Savings Bank, any of our affiliates, or an unaffiliated third party to whom you were referred or your agreement to provide any credit, product or

Communication Skills

1187 words - 5 pages ABSTRACT Title: AN EVALUATION ON THE READINESS OF THE CLARK INTERNATIONAL AIRPORT FOR THE IMPLEMENTATION OF THE INTEGREATED SAFETY MANAGEMENT SYSYEMS (ISMS) Researcher: Degree : Institution : Philippine State College of Aeronautics Basa Air Base, Pampanga This study is sought to determine the readiness of the Clark International Airport Corporation in carrying out the Integrated Safety Management

Case Study 2

2477 words - 10 pages regard, many different financial instruments can be used for hedging purposes which the most commonly used, it is derivative instruments. Before using hedging products, each institution must ensure that they understand the hedging instrument and that they are satisfied that the instrument matches their specific hedging needs in a cost-effective manner. Norwest Corporation could utilize interest swaps to hedge certain fixed-rate debt and certain

Audit Case

1806 words - 8 pages The Case In this case, Patrick Walker is an audit partner at a medium-sized CPA firm. Pat has decided to invest in a mutual fund that is managed by a third-party distributor, Fidelity Investments. Of the shares that are outstanding of this mutual fund, he owns less than 1%. It is also important to note that Pat’s mutual fund is diversified. Pat’s private client, XYZ Corporation, is a part of his diversified investment portfolio and happens

Fortune 500 Mission Statement

528 words - 3 pages Searching through fortune 500 list of businesses I have chosen my course assignment to include: J. P. Morgan Chase & Co. I am familiar with this corporation on an individual personal level and business advocate. J.P. Morgan Chase has a history of over 200 years, labeled as one of the oldest financial Institutions in the US. They are located in 60 countries with over 200,000 employees. They are a huge leader in investment banking, financial

Government Agencies

1613 words - 7 pages HOUSING AND LAND USE REGULATORY BOARD VISION An institution of professionals exemplifying public service with responsibility, integrity, competence and justice geared towards the attainment of well-planned and sustainable communities through the regulation of land use, housing development and homeowners associations, and the just resolution of disputes.. MISSION To promulgate and enforce policies on land use, housing and homeowners associations

Related Essays

Tax Structure Of Bangladesh Essay

972 words - 4 pages 1986. In 1999, the paid capital of the corporation was Tk 100 million, which was fully subscribed by the govern As the single state-owned institution to handle all types of general insurance business in Bangladesh, Sadharan Bima Corporation did 100% of the business until 1984. Through the Insurance (Amendment) Ordinance 1984 and Insurance Corporations (Amendment) Ordinance 1984, the government allowed operation of insurance companies in the private

Business Structures Essay

712 words - 3 pages corporation also may not have more than 100 shareholders and only one class of stock. The corporation must also be an illegible corporation meaning that it is not a financial institution, and insurance company, or a domestic international sales corporation. Limited Liability Corporation (LLC) This type of business structure is allowed by state statute; this means that each state has different regulations for these types of corporations. Owners

Religion As A Social Institution Essay

876 words - 4 pages social institution I will give you a definition of social institutions and then I will cover its function from the religious standpoint. First, let me give you some definitions. Webster’s New World College Dictionary tells us that an institution is an “organization, society, or corporation, having a public character, as a bank, church, bank, hospital, etc.” Our course reference book further defines a social institution as “organized patterns of

Business Analysis Part Iii: Costco Wholesale Corporation

2019 words - 9 pages , an institution that we hope will be here 50 years from the now. Strategic planning is an important part of running any business and the more so for businesses that operating in multiple states and countries.” On May 27, 2012, Costco Wholesale Corporation reported sales that covered a period of thirty-nine weeks. The Corporation reported “net sales of $7.67 billion for the month of May, the four weeks ended in May 27, 2012, an increase of 7