PL EN


2008 | 55 | 7/8 | 573-621
Article title

Analysis of a special sequence of events - the crisis on the secondary mortgage market and its consequences (also for Hungary)

Title variants
Languages of publication
HU
Abstracts
EN
This paper provides an overview of the antecedents, main triggers and spillover mechanisms of the turbulence emanating from the United States sub-prime market in the summer of 2007. Its primary goal is to discuss the facts and interrelationships featured in the various analyses and statistics, using a uniform, non-standard approach, to separate the 'centre' from the 'periphery' in terms of the impact of contagion, and to understand causes and effects. It is found that the primary causes of the turmoil were a persistently low international interest-rate environment and financial imbalances caused by globalization. The combination of rapid house-price inflation and asset price rises due to securitization of sub-prime mortgages (the origination and distribution model), coupled with the bursting of bubbles, were responsible for the severity of the distress. The spillover, in turn, was a consequence of increased international financial integration. One innovation in the paper is detailed analysis of the channel of contagion within financial integration: a major role at the epicentre was played by a confidence crisis, coupled with turbulence in inter-bank markets, while the triggers on the periphery were internal vulnerability, rises in risk premiums, and reduced access to credit.
Year
Volume
55
Issue
7/8
Pages
573-621
Physical description
Document type
ARTICLE
Contributors
author
author
  • Julia Kiraly, no address given, contact the journal editor
References
Document Type
Publication order reference
Identifiers
CEJSH db identifier
10HUAAAA078627
YADDA identifier
bwmeta1.element.c0f91720-de56-3056-87b9-a902f62fec61
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