BOCK, Michal and Jaromír TICHÝ. FAILURE OF THE CONTROL MECHANISMS IN US BANKS DURING THE CRISIS AND SPREAD OF THE FINANCIAL CRISIS INTO THE WORLD THROUGH STRUCTURED PRODUCTS. AD ALTA: Journal of Interdisciplinary Research. 2016, vol. 6, No 1, p. 79-81. ISSN 1804-7890.
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Basic information
Original name FAILURE OF THE CONTROL MECHANISMS IN US BANKS DURING THE CRISIS AND SPREAD OF THE FINANCIAL CRISIS INTO THE WORLD THROUGH STRUCTURED PRODUCTS
Authors BOCK, Michal (203 Czech Republic, belonging to the institution) and Jaromír TICHÝ (203 Czech Republic, belonging to the institution).
Edition AD ALTA: Journal of Interdisciplinary Research, 2016, 1804-7890.
Other information
Original language English
Type of outcome Article in a journal
Field of Study 50200 5.2 Economics and Business
Country of publisher Czech Republic
Confidentiality degree is not subject to a state or trade secret
WWW URL
RIV identification code RIV/04274644:_____/16:#0000083
Organization unit University of Finance and Administration
Keywords (in Czech) Strukturovaný produkt, VaR, CDO
Keywords in English structured product; role; interconnectedness of capital markets; CDO; VAR
Tags AR 2015-2016, WOS, xJ3
Changed by Changed by: Ing. Dominika Moravcová, učo 21787. Changed: 29/3/2017 12:26.
Abstract
The aim of this paper is to explain the role of structured products, particularly CDOs (Collateralized Debt Obligation) and its modifications to the rise of the international financial crisis since 2008. In that year, a large investment group Lehman Brothers went bankrupt, which rocked the global capital markets, and subsequently a negative sentiment about the quality of loan portfolios was extended, especially of mortgage banks in the US, which by means called moral hazard, increased the value of mortgage loans. The capital guarantee of the largest mortgage banks and insufficient control of federal authorities resulted in the uncontrolled growth of unsecured mortgages and growth of CDO emissions that were linked to these loans. Granted state aid supplies needed liquidity to the banks through emergency programs.
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