Topic Submission: The Subprime Mortgage Crisis, Conventional Banks and effects of the Crisis on Global trade with reference to LDCs
After the great depression, there is nothing close that can be compared to it other than the global economic crisis that engulfed the whole world between 2007 and 2011. The ripple effects of the economic downturn are still being felt in most parts of the world. However, the gravity of effects of the crisis that originated from bank failures in the US has been different in most parts of the world.
In 2007, the Subprime Mortgage Crisis was born reintroducing the world back to the era of bank failures and acute credit crunch (Demyanyk & Hemert, 2007, p.1848). This research topic aims at analyzing the real issues behind the Subprime Mortgage Crisis and the role of banks in its formation. The research paper will first of all find out what the subprime Mortgage Crisis is, its causes and how it affected international trade in the purview of Balance of Payments for LDCs. In the second part, the research paper will seek to find out why some countries were affected more than others and what underlying factors brought about the difference. Still under the analysis, the significance of the United States and more so the banking system under the Federal System Regulation will be studied. Finally, ethics and the banking sector will crown the discussion by putting into focus the banks that caused the crisis by initiating the collapse of two Bear Stearns Hedge funds in summer of 2007 (Paulet, Parnaudeau & Relano, 2014, p.201). The problem that the topic will provide a solution to is whether conventional or ethical banking should be embraced for future global economic stability.