To what extent have OTC derivatives been a major factor in the global Dissertation

To what extent view OTC derivatives been a major factor in the spherical fiscal crisis - Dissertation Example(Inhis 2002 Berkshire Hathaway (NYSE BK) letter to shareholders, company chairman and CEO Warren Buffet) This speaking paper attempts to explore the extent to which derivatives can be con spotred to be one of the major factors that have conduct to the current problems in the global monetary sector and looks at what steps can be interpreted to prevent a crisis on this scale happening again. This shall be on the basis of a check over of the available literature. OTC Derivatives and the Global Financial Crisis sidestep of Contents Abstract Page 2 Table of Contents Page 3 Chapter 1 Introduction Page 4 Chapter 2 Literature check into Page 6 Chapter 3 Research Methods Page 32 Chapter 4 Analysis and discussion of inquiry findings Page 33 Chapter 5 Conclusions and recommendations Page 42 Chapter 1 Introduction Outline the project Aims and objectives intellect for choosing th is The research methodology Any limitations of the research The main findings The onset of the Great Recession of 2008 was preceded by a slump in the housing market and a credit crunch that affected the entire thriftiness of the unify States. The ensuing financial crisis acquired global dimensions though at first it seemed that the US would be the hardest lulu due to the crisis. Even though the US Congress passed the TARP or the Troubled Asset residual Program to provide assistance to the banks worst hit by the crisis, the recession continued unabated. Further, the crisis itself was thought to have been brought about by a combination of factors that included poor regulatory oversight over the derivatives side of the banking business, predatory lending and the ill effects of well intentioned efforts to spread the risk associated with sub-prime lending across the financial system. This paper looks at the role of derivative instruments and derivative securitization specifically in t erms of the effect that they had on the financial system and how unchecked gambling by the banks led to casino capitalism and the resultant financial crisis that engulfed the entire economy and even other parts of the world. Since the focus of this paper is mainly on the United States and derivatives in particular, the available literature would be surveyed on these aspects. The emphasis throughout the paper would be on a critical analysis of the literature with a questioning attitude that goes beyond a dominion review. The aim of this dissertation is to examine the role contend by OTC Derivatives in causing the global financial crisis and the continuing aftermath of the crisis. The last part of the sentence above is significant as the derivatives having played a part in exacerbating the crisis have continued to torment the regulators and the investors alike who are so far to tackle the volcano of derivatives which are sitting on top of the financial system. Further, this dissert ation also discusses the attempts at regulating the derivatives by the various regulatory agencies involved and the way ahead to avoid a quote of the crisis that we saw in the winter of 2008. The dissertation is divided into different sections with the literature review and the research findings beingness the ones with the most emphasis. In addition to these two sections, the research methodology and the conclusions are given due weightage consort to the marking criteria for the dissertation. Chapter 2 Literature Review 1.1 Background The global financia