2008 Financial Crisis and Systemic Risk Regulation

Abstract

During the post-pandemic era, whether Covid-19 will cause a financial crisis is one of the key issues. Some research are done about the relationships between the Covid-19 crisis and the 2008 financial crisis, but there still exists much blank about mechanics and explanations in this field. This paper first focuses on the 2008 financial crisis, analyzing key factors attributing to such a serious financial crisis, giving suggestions in response to factors found, and then comparing the 2008 financial crisis to the Covid-19 crisis to give some warnings. In the course of analyzing key factors, this paper concludes with previous research and uses the game theory model to show why the policy of the government is indispensable. As to give responses, this paper takes the Dodd-Frank Act and Basel III for example to show how people deal with key factors found before and then gives some supplementary suggestions. The conclusion of this paper is that the 2008 financial crisis was the result of constantly aggressive monetary policy and peoples lack of awareness of risks and proper regulation. The by comparing the Covid-19 crisis and the 2008 financial crisis, this paper thinks the Covid-19 crisis wont be serious if the Fed is careful about constantly aggressive monetary policy and the government strictly implement policies like the Dodd-Frank Act and Basel III.