The Bursting of the Real Estate Bubble: More than a Trigger for the Financial Crisis
The bursting of the housing bubble in the USA was a key factor to propel the ensuing financial crisis. When real estate suffers a massive loss of value, banks are in greater trouble than when faced with a stock market crash because land is the main collateral for bank loans and home ownership is much more widespread than shareholdings. Historical studies have found a close link between real estate crises and financial crises. A collapse of real estate prices typically precedes a financial crisis by about a year.
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Volume (Year): 82 (2009)
Issue (Month): 12 (December)
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- Edward E. Leamer, 2007. "Housing is the business cycle," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 149-233.
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