Explain why the 2007-2008 financial crisis caused concerns, about systematic risk

        The systematic risk was occurred in the financial crisis 2008 because there were weak regulations from the regulatory authorities on the commercial banks. Poor regulation caused financial crisis in 2008 and otherwise the situation was never bad. There was weak and poor regulation on the house industry and mortgage principles were not considered by the banks. Mortgage loan was more become a bet system and less regulatory system (Burton, 2014). The demand for the housing was increasing which resulted in increase mortgage rates and people get defaulted because they were unable to pay such huge interest rate which resulted as mortgage crisis happened which was the systematic risk. Housing prices went down and banks never accepted it as collateral for loan, which further contributed into the housing crisis.

        This was the result of poor regulation on the commercial banks, which happened to the 2008 financial crisis. Banks did not follow the regulatory rules & regulations and their greed make them meeting the huge demand of mortgage, which inflated the housing sector and then people, started defaulting, which made the housing prices down, and now banks were not accepting it as collateral. If regulatory authorities had kept the check on banks and see that whether or not mortgage regulations have been met by the banks and other institutions also see that why housing market is being inflated  and any negative role into it. Banks are obvious to pay the greed so that maximization of profits can be ensured but it was the regulatory institutions job to see all that (Dorfman, 2018). The rise in the housing sector was fake and not real, this resulted as after years housing sector went down which resulted huge loss to the whole USA economy.

        This was the systematic risk because banks were associated with the financial markets and investors had invested in the financial market, which also affected the stock market, and companies lost the value of its share, which leads to unemployment, and shaking of the consumer confidence (Mayes, 2013). The consumer stopped spending on the economy, which further squeezed down the money in circulation and in the result; sales dropped which led to more unemployment. This was the systematic risk, which triggered down the whole economy and all results were in negative.

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