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摘要：There is common understanding consensus that the credit crisis commenced in the summer of 2007, when it was initially referred to as the "credit crunch" or "credit crisis". 代写留学生课程作业

largely focused on US and UK lenders.

Following the meltdown of the sub-prime mortgage market in the US the world's financial markets have undergone a period of unprecedented turmoil. Consecutively, this led and triggered the global economic conditions. Sub-prime lending was seen as a help and to sustain liquidity across the economy as a whole, and always ready to lend to sub-prime borrowers in the run-up to 2007. Likewise, due to poor credit history linked with more delinquent payments and defaults therefore the interest rates for sub-prime loans are substantially higher than those for prime loans. (Chomsisengphet and Pennington-Cross, 2006). Evidence indicated that the probability of default is six times higher for Sub-prime loans than prime loans. Furthermore, Sub-prime loans are less effective to interest rate changes and as a result sub-prime borrowers do not benefit from cheaper interest rates. (Pennington-Cross, 2003 and Capozza and Thompson, 2005).

In 2006 a slowdown was seen in the US housing market, coupled with rising US interest rates this led to a large volume of bad debt default and UK banking giant HSBC in 2006 had to make provisions of £5bn for bad US mortgage defaults. In 2005 it was estimated that investment bank Merrill Lynch had Sub-prime mortgages between £25bn and £30bn. Following rapid increases, followed by rapid decreases in house prices in the US. Mortgage debt begun https://www.51lunwen.org/liuxuezuoyedx/ to appear higher than the value of properties. Many economists believed that the US housing market price crash was caused in part by historically low interest rates. Between 1997 and 2006 house prices increased value by 124% in the US. This led to a US household debt percentage ratio of 130% of income (an increase of 30% over previous decades) (Bianco, 2008). With high default rate amongst Sub-prime borrowers and lenders inability to recover outstanding debts against the now deflated value of houses, a large financial gap begun to emerge where banks would not be able to recover monies lend. This is now known as the ‘credit crunch'. There has been unprecedented government and central bank intervention. The transformed global financial landscape will have a major impact on economic growth, lending conditions and the operation of markets. Assessment by many banks revealed what Diamond and Dybvig, 1983 observed which is that the basic ingredient of a crises is panic, and that this runs through leveraged institutions such as banks which undertake maturity transformation, generating liquidity crises.

ECB (2008), argues that ‘price falls affected not only the standardised instruments such as index-based collateralised debt obligations (CDOs) but also the ‘bespoke' structures that are not normally traded but which are nonetheless marked to market, since implicit prices for the latter are derived from the former'. ‘It is a year since the European Central Bank was forced to inject €95bn into the euro zone banking system, bringing home what many had suspected that the fallout from the US subprime mortgage crisis in the US was causing serious pain to global financial markets' (Financial Times, 2009). Figure 3 illustrate the effects on global financial markets.

Figures compiled by the Office of National Statistics confirm that the UK fell into recession in the third quarter of 2008. In the Financial Times article, (Cohen, 2009) discussed that ‘T本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。