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The real estate investments and the financial crisis in Romania

Author

Listed:
  • Ana POPA
  • Laura GIURCA VASILESCU

    (University of Craiova)

Abstract

This paper is based on a wide range of researches and statistics data, regarding the enormous stock real estate boom that started around 1982 and picked up incredible speed after 1995. First of all, many economists argue that this boom represents a speculative bubble, because it is not grounded in sensible economic fundamentals. Secondly, this boom must be placed it in the context of financial crisis starting in 2007. In fact, the global financial crisis has begun with the north-American subprime mortgage debacle in 2007. Thirdly, should monitor the dangerous situation that occurs after a significant increase in real estate markets, and at one time the market drops significantly or long stays. The problems of the real estate sector are placed in the financial crisis and these are explained by following chain - first, the substantial increase in the rate of personal bankruptcies, which could lead to a secondary string of bankruptcies of financial institutions as well. The main long-run consequence could be a decline in consumer and local business confidence, and another, possibly worldwide, recession. In Romania, all these evolutions are very important for the policy options and actions that should be taken.

Suggested Citation

  • Ana POPA & Laura GIURCA VASILESCU, 2009. "The real estate investments and the financial crisis in Romania," Finante - provocarile viitorului (Finance - Challenges of the Future), University of Craiova, Faculty of Economics and Business Administration, vol. 1(10), pages 65-70, December.
  • Handle: RePEc:aio:fpvfcf:v:1:y:2009:i:10:p:65-70
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    File URL: http://feaa.ucv.ro/FPV/010-08.pdf
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    More about this item

    Keywords

    real estate investments; financial crisis; subprime mortgage;

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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