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In this paper I will discuss this statement and demonstrate that wrong financial engineering practice and corporate governance effectively caused, or at least in part, the financial crisis. 2. The role of Financial Engineering in the Crisis The origins of the crisis have been discussed and a number of different causes have been pointed out. According to (Sun, et al., 2011), the roots of the crisis have been identified to be in the preference for deregulating financial institutions and markets, which resulted in the prompt growth of securitization. Financial engineering allowed a great burst of global derivatives setting the context in which major financial institutions thoughtlessly disregarded risk management and corporate governance.
For example, when a firm wishes to list on the London Stock Exchange (LSE), they must satisfy requirements of the previously self-regulatory LSE as well as ... ... middle of paper ... ...es it has come in the form of strict regulation, for others in relatively flexible regulation. The challenges now come from the increasing need for harmonisation of regulations in the EU and also the need to react to the effect that technology can have on financial markets, something that many current financial regulatory systems have yet to tackle. Works Cited: Benston, G.J. ‘Towards a Cost/Benefit analysis of the SEC: Have the British a Better Way?, Midland Corporate Finance Journal, 1985. Blake, D. ‘Financial Market Analysis.’ Wiley, 1999 Goodhart et al.
2003) By lenders and borrowers, it refers to individuals, businesses, financial instruments and governments. IR can be also categorised into nominal IR that is the stated one on financial market and real IR that implies the return of investment in terms of value. IR is said to be an indicator of economy situation and reflection of government policy as well. Therefore fluctuations of IR would have great impact on different areas in the economy and it is crucial to understand what determines it and how it would affect the world. This paper presents a general analysis of models of determinations s of interest rate, which are relevant to the UK economy.
881-893.  Nai-Fu Chen, Richard Roll, Stephen Ross. Economic Forces and the Stock Market, The Journal of finance, 59, pp. 383-403.  SA Ross.