| Summary: | This dissertation discusses the factors behind the subprime turmoil and the credit crunch that hit capital markets in 2007. This study combines current arguments on the crisis with both quantitative and qualitative analyses in order to investigate the ins and outs of the crisis and the most significant factors behind it. In particular, this dissertation explores two specific aspects of the crisis: The impact of a loose monetary policy by the Fed after 2001 on the housing market, and the impact of securitisation processes on the way the crisis spread over capital markets.
This dissertation concludes that even if the monetary policy is an explanatory factor for the rise in house prices, it is far from being the main one, particularly during the past few years. This dissertation also concludes that mortgage securitisation processes have been the key to explain the development of the crisis over capital markets and are directly responsible for losses experienced by financial institutions as a result of the turmoil.
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