ANALYSING THE 2008 AMERICAN FINANCIAL CRISIS: CAUSES AND CONSEQUENCES

Abstract

This study presents a comprehensive analysis of the 2008 American Financial Crisis, investigating its causes and consequences. The objective of this study is to shed light on the intricate factors that precipitated the crisis and the enduring impact it had on the global economy. Drawing upon a thorough review of literature and historical records, the background of the crisis is contextualized, highlighting the interplay of regulatory changes, housing market dynamics, and financial sector practices. Methodologically, a multidimensional approach is employed, integrating quantitative data analysis and qualitative assessment. Empirical evidence is synthesized to reveal the sequence of events leading to the crisis, emphasizing the role of subprime mortgages, securitization, and lax risk management. The results underscore the cascading effects that ensued, including the collapse of major financial institutions, soaring unemployment, and prolonged economic recession. Based on these findings, recommendations are formulated to bolster regulatory oversight, enhance risk assessment, and promote responsible lending practices. By elucidating the intricate web of causes and consequences, this study contributes to a deeper understanding of the crisis and offers actionable insights for policymakers, financial institutions, and stakeholders to mitigate the likelihood of similar crises in the future.