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Financial deregulation and the 2007-08 US financial crisis

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  • Özgür Orhangazi

    (Department of Economics, Kadir Has University, Istanbul)

Abstract

Financial deregulation was a significant factor in preparing the conditions for the 2007-08 financial crisis. In the run up to the crisis, deregulation created an environment in which mortgage lending expanded and speculation in other financial markets were heightened, even though riskiness was steadily increasing. In this paper, I review the history of regulation and deregulation in the US and discuss the channels through which financial deregulation contributed to the 2007-08 crisis. I begin with a brief overview of the history of regulation and deregulation in the US economy. Then, I discuss the channels through which financial deregulation contributed to the financial crisis. I review policy suggestions of those who see financial deregulation as the main contributor of the financial crisis and provide a critical assessment of these, while broadly situating financial deregulation within the context of the broader changes in capitalism since early 1980s.

Suggested Citation

  • Özgür Orhangazi, 2014. "Financial deregulation and the 2007-08 US financial crisis," Working papers wpaper49, Financialisation, Economy, Society & Sustainable Development (FESSUD) Project.
    • Handle: RePEc:fes:wpaper:wpaper49
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    References listed on IDEAS

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    Cited by:

    1. Eckhard Hein, 2015. "Causes and Consequences of the Financial Crisis and the Implications for a More Resilient Financial and Economic System: Synthesis of FESSUD Work Package 3," Working papers wpaper128, Financialisation, Economy, Society & Sustainable Development (FESSUD) Project.
    2. Hein, Eckhard, 2016. "Causes and consequences of the financial crisis and the implications for a more resilient financial and economic system," IPE Working Papers 61/2016, Berlin School of Economics and Law, Institute for International Political Economy (IPE).

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    More about this item

    Keywords

    financial deregulation; financial crisis; financialization; Great Recession;
    All these keywords.

    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • G1 - Financial Economics - - General Financial Markets

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