Since late 2007 the turbulences of the sub-prime mortgage market and its consequences haven shaken the international banking industry (cf. Wheeler and Werchola, 2007, p. 48-57; Nagl, 2008, p. 26). What started as a risky adventure became a problem when the U.S. housing bubble burst and the interest rates rose, significantly aggravating the high risk borrowers' possibilities to refinance and causing defaults on a large scale (cf. Lahart, 2007, p. 1; Wheeler and Werchola, 2007, p. 48-57). Due to the wide distribution of mortgage-backed derivatives, however, the problem did not remain confined to the U.S. market but rose to an international banking crisis heavily impacting banks all over the world (cf. Economist, 2007, p. 1; Nagl, 2008, p. 26). So far, the temporary peak of the global financial crisis has been reached in September and October 2008 with nationalizations (e.g. Fannie Mae, Freddie Mac, Fortis, Landsbanki), acquisitions (e.g. Bear Sterns, Merrill Lynch), and bankruptcies (e.g. IndyMac, Martinsa-Fadesa, Lehman Brothers) of multiple international big banks (cf. Eberle and Ziener, 2008, p. 2; Kazim, 2008, p. 1-2; International Monetary Fund, 2008b, p. 16). Even though the German banks have yet been mostly spared these fates, the private commercial banks (e.g. Deutsche Bank, Commerzbank), public banks (e.g. WestLB, BayernLB), and credit cooperatives (e.g. DZ Bank) nonetheless have to bear their share in the overall estimated losses of $1.4 trillion (cf. Wheeler and Werchola, 2007, p. 48-57; Economist, 2007, p. 1; Nagl, 2008, p. 26; Reuters, 2008, p. 1; International Monetary Fund, 2008a, p. ix-53; International Monetary Fund, 2008b, p. 8). And in spite of the increasingly strong involvement and support of national governments, central banks, and regulatory agencies, the aftermath of the crisis is expected to affect the banking industry over the next few years (cf. International Monetary Fund, 2008b, p. 62; Luttmer, 2008, p. 22; Riecke, 2008, p. 26).
KeywordsInternational Monetary Fund Saving Bank Banking Institution German Banking Credit Cooperative
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