The origins of the sub-prime crisis: Inappropriate policies, regulations, or both?

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.accfor.2009.04.001 Byline: Mervyn K. Lewis Keywords: Global financial crisis; Sub-prime mortgages; US current account deficit; Greenspan monetary policy; Shadow banking system; Collateralised debt obligations Abstract: This article analyses the origins of the sub-prime crisis. It argues that a series of serious policy errors in the United States created the conditions in which the sub-prime lending phenomenon took root, which were then compounded by regulatory developments and further policy mistakes as the credit crisis unfolded. These factors further explain why the sub-prime crisis assumed such global proportions. Author Affiliation: School of Commerce, University of South Australia, Adelaide, SA5001, Australia