Subprime crisis: the lay-out of a puzzle. An empirical investigation into the worldwide

This paper gives an overview of the worldwide financial crisis that shook the world from 2007. It tries to capture all factors that are important in this crisis and bring them together. It starts with an analysis of the bubble in the U.S. housing market. After that the mechanics of the hedge fund market are examined. An in-depth elaboration into the mortgage-backed security-market and securitization of it is given. The riskyness of these markets is discussed as well. The last part of the theoretical framework of this paper is about the contamination of the rest of the financial world, for instance after the Lehman Brothers meltdown and the Icelandic bankruptcy. The empirical part of this investigation contains a balance sheet approach of four U.S. banks and four Dutch banks and a comparison between the theoretical part of this paper with crisis factors at three major banks. Critical success factors for the three banks are transparance at SPVs and a thorough risk management section.