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In: Finance

Could the subprime meltdown in the US that happened between 2007 to 2010 can also happen...

Could the subprime meltdown in the US that happened between 2007 to 2010 can also happen in the Philippines? Why or why not? Explain

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Expert Solution

I do not think that same subprime meltdown in United States can be repeated in Philippines because -

A. Central banks have been more proactive and they are appropriately regulating the monetary policy in the best possible manner

B. there is a high regulation of the derivatives market in Philippines and it is not possible for investment bankers to take irresponsible positions like they did in supprime mortgage crisis.

C. the housing sectors have been regulated properly in Philippines and there is no asset bubble like sub prime mortgage crisis

D. there is also a learning from the past mistakes of other economies like United States economies and credit ratings are also highly adequate in order to issue the ratings

E. investors are also not that arrogant and there is no Bull market which can be seen like it was seen in of early mortgage crisis so it is not possible.

Crisis like subprime mortgage is not possible in Philippines due to better regulation and proactiveness of the central banker & awareness of the market participants.

jeff jeffy answered 2 years ago
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