THE IMPACT OF GLOBAL FINANCIAL CRISIS ON THE NIGERIAN CAPITAL MARKET

📄 Project Abstract

The current global economic meltdown which started in late 2007 was as a result of a liquidity shortfall in the United States banking system. The immediate cause or trigger of the current crisis was the bursting of the United States housing bubble which peaked in approximately 2005-2006. Already-rising default rates on "subprime" and adjustable rate mortgages (ARM) began to increase quickly thereafter. An increase in loan packaging, marketing and incentives such as easy initial terms, and a long-term trend of rising housing prices had encouraged borrowers to take on difficult mortgages in the belief they would be able to quickly refinance at more favorable terms. However, once interest rates began to rise and housing prices started to drop moderately in 2006-2007 in many parts of the U.S., refinancing became more difficult. Defaults and foreclosure activity increased dramatically as easy initial terms expired, home prices failed to go up as anticipated, and ARM interest rates reset hig...