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The Credit Crunch of 2007: What Went Wrong? Why? What Lessons Can be Learned?

In: The First Credit Market Turmoil Of The 21st Century Implications for Public Policy

Author

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  • John C. Hull

    (University of Toronto, Canada)

Abstract

This paper explains the products that were used to securitize mortgages during the period leading up to the credit crunch of 2007 and explains why many of these products have performed so badly. It also examines some of the lessons that can be learned from the crisis.

Suggested Citation

  • John C. Hull, 2009. "The Credit Crunch of 2007: What Went Wrong? Why? What Lessons Can be Learned?," World Scientific Book Chapters, in: Douglas D Evanoff & Philipp Hartmann & George G Kaufman (ed.), The First Credit Market Turmoil Of The 21st Century Implications for Public Policy, chapter 11, pages 161-174, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789814280488_0011
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    Citations

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    Cited by:

    1. Beniamino Moro, 2013. "The Run On Repo and the Liquidity Shortage Problems of the Current Global Financial Crisis: Europe vs. The US," Ekonomi-tek - International Economics Journal, Turkish Economic Association, vol. 2(1), pages 41-77, January.
    2. Zaman, Gheorghe & Georgescu, George, 2011. "Sovereign risk and debt sustainability: warning levels for Romania," MPRA Paper 32924, University Library of Munich, Germany.
    3. Thilo A. Schmitt & Rudi Schafer & Thomas Guhr, 2016. "Credit risk: Taking fluctuating asset correlations into account," Papers 1601.03015, arXiv.org.
    4. Zaman, Gheorghe & Georgescu, George, 2009. "Effets globaux de la crise financière. Nouveaux défis pour le développement durable en Roumanie [Global effects of the financial crisis. New challenges for the sustainable development in Romania]," MPRA Paper 53181, University Library of Munich, Germany.
    5. Mr. Manmohan Singh & Mr. Mohsan Bilal, 2012. "CDS Spreads in European Periphery: Some Technical Issues to Consider," IMF Working Papers 2012/077, International Monetary Fund.
    6. Bank for International Settlements, 2011. "Portfolio and risk management for central banks and sovereign wealth funds," BIS Papers, Bank for International Settlements, number 58.
    7. Lei, Lei & Peng, Yijie & Fu, Michael C. & Hu, Jian-Qiang, 2023. "Copula sensitivity analysis for portfolio credit derivatives," European Journal of Operational Research, Elsevier, vol. 308(1), pages 455-466.
    8. Andreas Muhlbacher & Thomas Guhr, 2018. "Credit Risk Meets Random Matrices: Coping with Non-Stationary Asset Correlations," Papers 1803.00261, arXiv.org.
    9. Mr. Manmohan Singh & Karim Youssef, 2010. "Price of Risk: Recent Evidence From Large Financials," IMF Working Papers 2010/190, International Monetary Fund.
    10. Patrick Hamshere & Liam Wagner, 2012. "Potential Impacts of Subprime Carbon on Australia’s Impending Carbon Market," Energy Economics and Management Group Working Papers 14, School of Economics, University of Queensland, Australia.
    11. Daniel Rösch & Harald Scheule, 2011. "Securitization rating performance and agency incentives," BIS Papers chapters, in: Bank for International Settlements (ed.), Portfolio and risk management for central banks and sovereign wealth funds, volume 58, pages 287-314, Bank for International Settlements.
    12. Rösch, Daniel & Scheule, Harald, 2012. "Capital incentives and adequacy for securitizations," Journal of Banking & Finance, Elsevier, vol. 36(3), pages 733-748.
    13. Trautmann, Stefan T. & Vlahu, Razvan, 2013. "Strategic loan defaults and coordination: An experimental analysis," Journal of Banking & Finance, Elsevier, vol. 37(3), pages 747-760.
    14. Marco Geidosch & Matthias Fischer, 2016. "Application of Vine Copulas to Credit Portfolio Risk Modeling," JRFM, MDPI, vol. 9(2), pages 1-15, June.
    15. Andreas Mühlbacher & Thomas Guhr, 2018. "Extreme Portfolio Loss Correlations in Credit Risk," Risks, MDPI, vol. 6(3), pages 1-25, July.
    16. Daniel Rösch & Harald Scheule, 2014. "Forecasting Mortgage Securitization Risk Under Systematic Risk and Parameter Uncertainty," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 81(3), pages 563-586, September.
    17. Zaman Gheorghe & Georgescu George, 2009. "The Impact Of Global Crisis On Romania'S Economic Development," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 2(11), pages 1-1.
    18. Andreas Mühlbacher & Thomas Guhr, 2018. "Credit Risk Meets Random Matrices: Coping with Non-Stationary Asset Correlations," Risks, MDPI, vol. 6(2), pages 1-25, April.
    19. Rüdiger Kiesel & Robin Rühlicke & Gerhard Stahl & Jinsong Zheng, 2016. "The Wasserstein Metric and Robustness in Risk Management," Risks, MDPI, vol. 4(3), pages 1-14, August.

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