Subprime Crisis Reasons And Its Implications For China

The subprime market crisis in USA started to be recognized when the second largest mortgage institution in USA-New Century Finance Corporation filed the bankruptcy protection, in April 2007. Sam year in June, the bankruptcy of the fifth largest investment bank-Bear Stearns caused by its hedge funds investing in subprime loan finally brings the finance turbulence worldwide, which also causes the great downside effect to the world stock market. This financial crisis rapidly spreading from USA to every corner of the world is caused by the housing bubble. It brings severely disaster and shocks to the global finance market. What are the fundamental causes of this financial disaster?This thesis goes deeply from its background to analyze the processing of the financial crisis, then starting to focus on the external reasons, system reasons, and specific reasons. Lastly, an analysis of correlation of the fundamental reasons, together with economic development in China, this paper concludes with the after-crisis suggestions brought by the subprime market crisis, which are the revelations to our financial protection system. As the fourth largest economy, the biggest major trading countries, China certainly is affected. This crisis affects not only the trading business, but also the finance industry. Except for the inevitable financial system risks, the subprime market crisis also challenge our Macro-economic polices, which will involves further discussion of it.