Economics - Financial Institustions and Markets Research Paper

Economics - Financial Institustions and Markets - Research Paper Example This paper looks at the collapse of the repo market and the effect of ‘safe harbor’ facilities provided to the lending institutions in the derivatives market. Arguments have been made that the use of collaterals have made more harm than benefit to the economy and hence alternatives have been discussed to eliminate these facilities from the market. Thesis statement The aim of this paper is to investigate the causes of failure of the financial institutions in the United States. The research is specifically directed towards the study of the structure of the US financial system and the role of safe harbor in the failure of major financial institutions in the country. Introduction The global financial collapse has been one of the most significant incidents in the history of the world and it has raised significant research and debates on the factors that led to a financial breakdown of such a measure. There is considerable debate on the causes of this phenomenon and researcher s have not been able to come to clear consensus about the actual causes of the incident. However, a stream of events has been identified, which are considered to be the possible factors that led to the downfall of the financial institutions