Essays on real estate and financial crisis : from the US housing market downturn to the global financial crisis

The thesis studies three pivotal episodes in the evolution of what became the Global Financial Crisis of 2008-09. These three events - the collapse of the US housing market, the breakdown of the repo money market, and the banking crash - are indispensable for understanding some of the key economic forces that supposedly lay behind the escalation of the Global Financial Crisis. They tell a story of what went wrong and why. For instance, had mortgage contracts not been ill-designed in the sense that they facilitated deliberate defaults, the drag on the wider US housing market would have been less dramatic. Had large financial institutions not relied that heavily on short-term funding backed by US housing collateral, they might have been able to sufficiently roll over their obligations. Had the hoarding of liquid securities by prime brokers not harmed financial intermediation, the secured funding market might not have squeezed. Consequently, the investment bank Lehman Brothers would have possibly been intact today. No financial contagion would have been released. But unfortunately, all of these events did occur. Nonetheless, this experience gives policy makers, professionals and researchers the opportunity to learn how comparable episodes of turbulence might be better coped with.