Publication:
The U.S. Subprime Mortgage Crisis: Issues Raised and Lessons Learned

Loading...
Thumbnail Image
Files in English
English PDF (1.7 MB)
2,828 downloads
English Text (147.35 KB)
181 downloads
Date
2008
ISSN
Published
2008
Abstract
The subprime mortgage crisis ranks among the most serious economic events affecting the United States since the great depression of the 1930s. This study analyzes key issues raised by the crisis at three levels: (i) issues directly and specifically relating to subprime mortgage lending; (ii) issues relating to the securitization of subprime mortgages; and (iii) issues affecting financial markets and institutions. These issues are fundamental to risk bearing, sharing, and transfer in financial markets and institutions around the world. Many of the issues raised by the U.S. subprime crisis also apply to high-risk loan markets in developing countries. The framework applied in the paper analyzes subprime mortgage lending as a major financial market innovation. Although conditions were conducive for subprime lending to arise as a financial innovation, financial innovations are necessarily risky undertakings, all the more so when they create new classes of risky loans and securities. The lessons learned from the crisis can thus be usefully applied to issues of the growth and development of emerging economies, as well as pointing the way to the design of new and efficient policies for subprime lending in the developed economies.
Link to Data Set
Citation
Jaffee, Dwight M.. 2008. The U.S. Subprime Mortgage Crisis: Issues Raised and Lessons Learned. Commission on Growth and Development Working Paper;No. 28. © World Bank, Washington, DC. http://hdl.handle.net/10986/28008 License: CC BY 3.0 IGO.
Report Series
Other publications in this report series
Journal
Journal Volume
Journal Issue
Associated URLs
Associated content
Citations