Answer to Question #308564 in Marketing for Dee Park

Question

Discuss the main causes of the financial crisis in 2008? Identify the main risks that contributed to the crisis!

Reference your work.

At least 6-8 pages (100 marks)

Answer 1

The financial crisis was primarily caused by deregulation in the financial industry that permitted banks to engage in hedge fund trading with derivatives. Banks then demanded more mortgages to support the profitable sale of these derivatives. The financial crisis was caused by unscrupulous investment banking and insurance practices that passed all the risk to investors. Other causes of the 2008-2009 economic crisis include subprime mortgages gone bad that were packaged into risky securities gone bad compounded by lax regulatory oversight, a credit crunch that is reduced lending by financial institutions, and lack of consumer confidence.