Financial institutions and markets are important components of the economy. The recent financial crisis that started in 2007 affected many organizations including financial institutions and markets.
For your final project, you will write a scholarly paper that examines the financial crisis and its impact on financial institutions and markets. Make sure that you address the following issues in your paper:
• Causes of Problems for Financial Institutions during the Financial Crisis: Briefly discuss the financial crisis. Determine and discuss the underlying causes of problems experienced by financial institutions during the recent financial crisis. Explain how these problems might have been avoided.
• Impact of Financial Crisis on Financial Market Liquidity: Explain the link between the financial crisis and the lack of in the financial markets. Specifically, offer some insight as to the reasons the debt markets became inactive at the time. How were interest rates affected? What happened to initial public offering (IPO) activities during the crisis period?
• Risk Management: Discuss whether or not institutional investors that purchased mortgage-backed securities containing subprime mortgages followed reasonable investment guidelines and risk management. Address this issue for various types of financial institutions such as pension funds, commercial banks, insurance companies, and mutual funds. If financial institutions were taking on too much risk, explain whether or not current regulations (especially those passed during and after the financial crisis) are adequate to avoid future recurrence. In addition, recommend how regulations can be changed to limit excessive risk taking.
