2008 Global economic crisis: A commentary

The most common narrative about the causes of the 2008 crisis is centered on the housing market in the United States and the inability of many lenders to repay their loans. The so-called “deregulation” of the financial system that began in the 1980s in Great Britain and continued in the 1990s (Mankiw & Taylor, 2010) could be, however, considered as the starting point. By “deregulation” we mean a change in the institutional framework so that the rules and regulations concerning the operation of banks and other financial institutions are either abolished or become more flexible. In the era of the Thatcher government in the Great Britain, the banking system changed radically, as a series of restrictions on bank financing were abolished. Throughout the decade of 1990s, the restrictions became more flexible, allowing financial institutions to operate more freely, while the law Gramm-Leach-Blilay of 1999 (also known as “The Financial Services Modernization Act of 1999”) abolished the differences between commercial and estate banks, insurance and stock exchange companies.