publication . Article . Other literature type . 2009

Deciphering the Liquidity and Credit Crunch 2007-2008

Markus K Brunnermeier;
Open Access
  • Published: 01 Jan 2009 Journal: Journal of Economic Perspectives, volume 23, issue 1 Winter, pages 77-100
Abstract
The financial market turmoil in 2007 and 2008 has led to the most severe financial crisis since the Great Depression and threatens to have large repercussions on the real economy. The bursting of the housing bubble forced banks to write down several hundred billion dollars in bad loans caused by mortgage delinquencies. At the same time, the stock market capitalization of the major banks declined by more than twice as much. While the overall mortgage losses are large on an absolute scale, they are still relatively modest compared to the $8 trillion of U.S. stock market wealth lost between October 2007, when the stock market reached an all-time high, and October 2...
Subjects
free text keywords: jel:E32, jel:E44, jel:G21, jel:G28, jel:G14, Shadow banking system, Credit crunch, Liquidity crisis, Liquidity risk, Financial system, Financial crisis, Market impact, Market liquidity, Funding liquidity, Economics, Finance, business.industry, business, Economics and Econometrics
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