The Impact of the US Sub-Prime Crisis on Global Financial Stability and Economic Interdependence

EasyChair Preprint 14440

Abstract

The US sub-prime mortgage crisis of 2007-2008 catalyzed a profound global financial upheaval, revealing the intricate web of economic interdependence and the vulnerabilities inherent in the international financial system. This paper examines the multifaceted impacts of the sub-prime crisis on global financial stability and economic interdependence, focusing on three key areas: the transmission mechanisms of financial contagion, the subsequent regulatory and policy responses, and the long-term implications for global economic integration.

We first analyze how the sub-prime crisis, rooted in high-risk mortgage lending and securitization, triggered a cascading series of failures in financial institutions worldwide. The crisis highlighted the interconnectedness of global financial markets and the rapid propagation of economic shocks across borders. Next, we explore the regulatory and policy responses enacted by various countries and international bodies to mitigate the immediate fallout and prevent future crises. This includes the reform of financial oversight mechanisms, changes in lending practices, and enhanced international cooperation.

Finally, the paper discusses the enduring implications of the crisis for global economic interdependence. The increased scrutiny of financial practices and the evolution of international regulatory frameworks underscore a shift towards greater systemic resilience. However, the crisis also exposed and sometimes exacerbated pre-existing inequalities and vulnerabilities in the global economy.

Through a comprehensive analysis of these dimensions, this study provides insights into the lessons learned from the sub-prime crisis and its lasting influence on global financial stability and economic policy.

Keyphrases: Economic Interdependence, US Sub-prime Crisis, financial crisis, financial stability

@booklet{EasyChair:14440,
  author    = {John Owen},
  title     = {The Impact of the US Sub-Prime Crisis on Global Financial Stability and Economic Interdependence},
  howpublished = {EasyChair Preprint 14440},
  year      = {EasyChair, 2024}}