Systemic Risk in the Financial Sector: An Analysis of the Subprime-Mortgage Financial Crisis

  title={Systemic Risk in the Financial Sector: An Analysis of the Subprime-Mortgage Financial Crisis},
  author={Martin F. Hellwig},
  journal={Monetary Economics},
The paper analyses the causes of the current crisis of the global financial system, with particular emphasis on the systemic elements that turned the crisis of subprime mortgage-backed securities in the United States, a small part of the overall system, into a worldwide crisis. The first half of the paper explains the role of mortgage securitization as a mechanism for allocating risks from real estate investments and discusses what has gone wrong and why in the implementation of this mechanism… Expand
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