Fraudulent behavior of investment banking as one of the reasons for the appearance of 2008 world economic crises
Fraudulent behavior of investment banking as one of the reasons for the appearance of 2008 world economic crises

Summary/Abstract: This paper is focused on investment banking and analyzes specific cases from the past which had major impact on the crises with an aim to find possible solutions to eliminate the existing weaknesses in the finance and investments sectors.Due to the lack of control and supervision, during the last two decades the investment banks exercised enormous freedom and were profit oriented taking highly risky trades and investments. These actions put them into a very difficult financial situation which did affect the whole world economy. The root of that is the amendment of the U.S. Glass - Steagall act (1999) which allowed intermingling of investment and commercial activities, the holes in the international standards and the introduction of two new products on the market: securitization and derivative trading. The trading with derivatives expanded the crises worldwide, turning the US collapse into international collapse. The crises took massive measures and drew the entire world economy into financial crises and the biggest recession in the history.

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