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Northern Rock: The Crisis of a UK Mortgage Lender


  • Maria-Cristina UNGUREANU

    (European Corporate Governance Institute, University of Genoa, Italy)

  • Vasile COCRIS

    (Faculty of Economics and Business Administration, "Al.I.Cuza" University of Iasi, Romania)


The global market liquidity squeeze for securities that initiated in 2007 has increased pressure among banks to sell, pushed down prices, and impacted the market for interbank loans, leading to a funding gap at Northern Rock, Britain’s fifth largest mortgage bank. This paper presents an analysis of the events that lead to the collapse of Northern Rock in the second half of 2007 and its rescue by the UK Government towards the end of the same year and the beginning of 2008. The paper presents the implications and banking reforms proposed by the UK financial authorities.

Suggested Citation

  • Maria-Cristina UNGUREANU & Vasile COCRIS, 2008. "Northern Rock: The Crisis of a UK Mortgage Lender," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 2, pages 129-139, November.
  • Handle: RePEc:aic:revebs:y:2008:i:2:ungureanum

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    References listed on IDEAS

    1. Rubinstein, Mark, 1994. " Implied Binomial Trees," Journal of Finance, American Finance Association, vol. 49(3), pages 771-818, July.
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    6. Black, Fischer & Scholes, Myron S, 1973. "The Pricing of Options and Corporate Liabilities," Journal of Political Economy, University of Chicago Press, vol. 81(3), pages 637-654, May-June.
    7. Mark Rubinstein., 1994. "Implied Binomial Trees," Research Program in Finance Working Papers RPF-232, University of California at Berkeley.
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    More about this item


    financial crisis; banking reforms; financial regulation;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation


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