THE SUBPRIME CRISIS

Excess credit along with bad management in the banking industry may bring about default likely to result in a systemic risk. The turmoil experienced by financial markets since mid 2007 stems from the highly speculative behaviour of second rank banks in a context of liberalized finance. Originating in the United States, this crisis has fanned out across global financial markets and portends an economic recession. In spite of the strict regulation of financial markets, the subprime crisis has revealed the improper behaviour of some establishments and the shadiness of financial engineering that continue to affect the financial world because of the spread of risk and a contagion effect.