An Analysis of the Financial Crisis of 2008: Causes and Solutions

Murphy, Austin

doi:10.2139/ssrn.1295344

Cited by 69 publications

(59 citation statements)

References 12 publications

(8 reference statements)

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“…it is thought that a major contributing factor is the failure of unregulated swaps markets (Murphy, 2008) a possible indication that sophistication of the industry had outpaced the governance arrangements. According to (Arner, 2009) apart from the fact that fi nancial institutions did not manage their own risks or businesses, one of the major causes was the divergence between domestic regulatory structures and the realities of global fi nance.…”

Section: S Letza Corporate Governance and The African Business Contextmentioning

confidence: 99%

Corporate Governance and the African Business Context: the Case of Nigeria

Letza¹

2017

EBR

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ARTICLES Agency costs of overvalued equity and earnings management in companies listed on WSE (Michał Kałdoński, Tomasz Jewartowski) Friends or foes? Activist hedge funds and other institutional investors (Andrew Carrothers) Board ethos and institutional work: developing a corporate governance identity through developing the uk code (Donald Nordberg)Governance and fi nancing of innovative very small business (VSB): evidence from a Canadian biotechnological fi rm (Alidou Ouedraogo) Corporate governance, risk and crises in small companies: shedding light from inside the boardroom black box (Leslie Spiers) Gender diversity impact on corporate social responsibility (CSR) and Greenhouse Gas emissions in the UK (Renata Konadu)Lessons university-based business schools should learn vicariously-rather than through experience-from university athletics (Edward W. Miles) Commercialization of the education of economists versus integrity of the university (Jan Szambelańczyk) Abstract: A robust institutional framework is essential to enable fi rms to function effi ciently. Th e aspect of corporate governance investigated in this paper is the legal and societal principles and process which form the business context within which fi rms operate. Th e paper explores the challenges to fi rms trading in Africa arising from cultural dynamics peculiar to the continent and further explores the historical reasons for the present cultural context to business in Africa. Nigeria is presented as a special case, perhaps even an extreme case, of the challenges to corporate governance in Africa since it is perceived by many to be one of the weaker environments given its perceived levels of corruption. Th e paper concludes with an assessment of the likelihood of African states successfully tackling corruption in the future as the current approaches unfold over the coming years.

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Section: S Letza Corporate Governance and The African Business Contextmentioning

confidence: 99%

Corporate Governance and the African Business Context: the Case of Nigeria

Letza¹

2017

EBR

View full text Add to dashboard Cite

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“…Moreover, when the market is unregulated, it becomes a black hole to absorb money until there is a colossal collapse as discovered recently in US mortgage market. In US it is estimated that this unregulated market grew astronomically from $900 million in 2000 to over $50 trillion in 2008 (Murphy, 2008). Experts describe the mortgage market crack down as only a component and symptom of the deeper problem (Murphy, 2008).…”

Section: Market Loopmentioning

confidence: 99%

“…In US it is estimated that this unregulated market grew astronomically from $900 million in 2000 to over $50 trillion in 2008 (Murphy, 2008). Experts describe the mortgage market crack down as only a component and symptom of the deeper problem (Murphy, 2008). Mispricing in financial market is very common and unavoidable as long as businesses continue to grow.…”

Section: Market Loopmentioning

confidence: 99%

Welfare Dynamics Based on a New Concept of Inefficient Equilibrium

Zaman¹

2008

SSRN Journal

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This article has developed a new model of welfare dynamics under imperfect information or imperfect competition by introducing a new concept of "inefficient equilibrium". If a country suffers from poverty, then the population of the country can be divided into two groups. For one group the fundamental welfare theorems are valid and for the other group the welfare is yet to achieve. The first group establishes an inefficient equilibrium with the second group. The institutions of an economy play very important role when these two groups interact with each other. This concept narrowly defines where government should work. This model is enhanced to describe a new 'Market Model of Welfare Dynamics' that our market is not uniform but distributed in layers of energy states. The probability of achieving Pareto efficiency decreases down along the market energy states. At the end, another new concept 'Market Loop' is defined to shed light on recent financial crisis and recession.

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“…The other side of the literature investigates how the relatively small size of subprime mortgages losses can be amplified into a worldwide financial crisis (e.g., Murphy, 2008;Hellwig, 2009;Schwarcz, 2009). The estimated loss in subprime mortgage-backed-securities was about $500 billion dollars, which is smaller than the technology bubble loss in 2000 (Hellwig, 2009).…”

Section: Introductionmentioning

confidence: 99%

The Opaqueness of Structured Bonds: Evidence from the U.S. Insurance Industry

Park

Lemaire

Xie

2016

Geneva Pap Risk Insur Issues Pract

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It has been argued that the opaqueness of structured bonds, such as mortgage-backed securities, asset-backed securities and collateral debt obligations, was one of the major causes of the recent financial crisis that started in late 2007. We analyse the evolving nature of information asymmetry inherent in various types of structured bonds by examining the U.S. insurers' assets. We show that, prior to 2004, structured bonds were not associated with greater information asymmetry; however, holding more multi-class structured bonds, especially privately placed bonds, increased the information asymmetry when evaluating insurers' assets post-2004. The effect of information asymmetry was more significant with life insurers than with non-life insurers. In addition, by investigating the rating grades of such structured bonds, we find that the market views higher-grade, privately placed, multi-class structured bonds as having the highest information asymmetry among all types of structured bonds post 2004, an effect which is, again, more significant with life insurers. This result shows that structuring complexities and unreliable ratings make structured bonds more opaque than just securitisation itself. AbstractIt has been argued that the opaqueness of structured bonds such as Mortgage-Backed Securities (MBS), Asset-Backed Securities (ABS), and Collateral Debt Obligations (CDOs) was one of the major causes of the recent financial crisis that started in late 2007.In this article, we analyze the evolving nature of the opaqueness of structured bonds by examining U.S. insurers' assets from a capital markets perspective. We show that, before 2005, the market did not view structured bonds as opaque investments; however, after 2005, the market began to perceive multi-class structured bonds, especially private bonds, as opaque assets. In addition, by investigating the rating grades of such structured bonds, we find that the market views lower-grade, private, multiclass structured bonds as the most opaque assets. Additionally, publicly traded multi-class structured bonds with superior ratings are also considered opaque. This result provides a useful foundation for the reform of credit rating agencies.

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An Analysis of the Financial Crisis of 2008: Causes and Solutions

Cited by 69 publications

References 12 publications

Corporate Governance and the African Business Context: the Case of Nigeria

Corporate Governance and the African Business Context: the Case of Nigeria

Welfare Dynamics Based on a New Concept of Inefficient Equilibrium

The Opaqueness of Structured Bonds: Evidence from the U.S. Insurance Industry

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