A Systemic Failure: Understanding the Role of Regulation and Risk in the 2008 Financial Crisis

Abstract

With the advent of the 21st century, the world is slowly developing in the direction of diversification, and world diversification also brings economic diversification. The cooperation between countries is getting closer and closer, economic exchanges are becoming more and more frequent, and the possibility of financial hidden dangers is slowly increasing, and the deepening of the international division of labor means that once there is a financial problem, then the world will suffer serious consequences, which makes the study of financial crisis an indispensable matter at present. Based on the subprime mortgage crisis of 2008, this paper analyzes the macroeconomic policies of the United States before the crisis, the loose financial regulatory system and lending standards, and the direct factors that led to the crisis, and finally explains the impact of the crisis on the world after the crisis, as well as the remedial measures of countries around the world represented by the United States. By discovering the fundamental cause of the subprime mortgage crisis of 2008 and improving the policies of various governments in financial supervision after the crisis, this paper aims to illustrate the importance and necessity of studying the financial crisis to the development of the world economy.