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The Impact of the US Subprime Mortgage Crisis on the World and East Asia

Author

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  • Shirai, Sayuri

Abstract

The world economy currently suffers from a global financial and economic crisis that has become severe since the second half of 2008. This global financial situation was triggered by the advent of the subprime mortgage crisis in the United States that became apparent from the mid-2007s. Europe was the next affected, thereafter its contagion spread to the rest of the world. East Asia did not escape. The nature of the current global financial crisis is unprecedented in terms of (1) the scale of the problems in the financial sector (particularly in the United States and Europe), (2) the depth and speed of contagion worldwide (through financial sector and trade linkages), and (3) the severity of the recession (particularly in emerging market economics, small countries, and East Asia). This paper analyzes, mainly, cross-border capital movements by looking at the pre-crisis features of the United States as the crisis hypocenter and its relationships with other countries. Detailed observations are conducted with respect to cross-border investment in stocks and debt securities, as well as banking activities. The paper then sheds light on the impact of the subprime mortgage crisis on cross-border capital movements in the United States, the United Kingdom, and East Asia. Other performance indicators such as exchange rates, economic growth and international trade are also discussed in the case of East Asia. The paper examines several challenges the recent crisis poses for East Asia.

Suggested Citation

  • Shirai, Sayuri, 2009. "The Impact of the US Subprime Mortgage Crisis on the World and East Asia," MPRA Paper 14722, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:14722
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    File URL: https://mpra.ub.uni-muenchen.de/14722/1/MPRA_paper_14722.pdf
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    References listed on IDEAS

    as
    1. International Monetary Fund, 2008. "Republic of Korea; Selected Issues," IMF Staff Country Reports 08/296, International Monetary Fund.
    2. Olaf Unteroberdoerster & Cynthia Leung, 2008. "Hong Kong SAR as a Financial Center for Asia; Trends and Implications," IMF Working Papers 08/57, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Okabe, Yasunobu, 2013. "Financial Restructuring after the 1997 Crisis and Impact of the Lehman Shock: Path Dependence of Financial Systems in Korea and Thailand," Working Papers 51, JICA Research Institute.
    2. Hasan, Rashid & Mohammad, Salim M., 2015. "Multifractal analysis of Asian markets during 2007–2008 financial crisis," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 419(C), pages 746-761.
    3. Shirai, Sayuri, 2009. "世界経済危機とグローバル・マネーの変動 ―国際経済秩序へのインプリケーションー
      [Global Economic Crisis and Movements of Cross-Border Capital Flows ―Implication to the Global Economic Order―]
      ," MPRA Paper 18619, University Library of Munich, Germany.

    More about this item

    Keywords

    Subprime Mortgage; Global Economic Crisis; East Asia; Cross-border capital flows;

    JEL classification:

    • F3 - International Economics - - International Finance
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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