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CHAPTER 6 - ISSUES IN INTERNATIONAL BANKING …
CHAPTER 6 - ISSUES IN INTERNATIONAL BANKING 
Subprime Crisis
Housing Bubble
:strawberry: A housing bubble is an economic problems that occurs in local or global real estate markets
:strawberry: It is defined by rapid increases in the valuations of real property until sustainable levels are reached
:strawberry: Housing bubble generally identified after a market correction, which occurred in US around 2006
Declining Risk Premiums
:four_leaf_clover: In 2007, average differences in mortgage interest rates between prime mortgages declined from 2.8% to 1.3%
:four_leaf_clover: This means, the risk premium required by lenders to offer a subprime loan declined
:four_leaf_clover: Instead, the decline of the risk premium led to lenders considering higher-risk borrowers for loans
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Introduction
:pen: Subprime loan is refer as near-prime, non-prime & second-chance lending
:pen: Meaning, making loans to people who may have difficulty maintaining the repayment schedule
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Islamic Banking Isuue
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Standardization
:pencil2: vocabulary or term used for Islamic products.
:pencil2: Modus operandi of financial instrument and their documentations.
:pencil2: Pricing formula for Islamic financial product.
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Asian Financial Crisis
Introduction
a.First, sudden shifts in market expectations and confidence were the key sources of the initial financial turmoil, its propagation over time and regional contagion. According to the other view,the crisis reflected structural and policy distortions in the countries of the Asian region.
b.Secondly, fundamental imbalances caused the currency and financial crisis in 1997. Once the crisis started, market overreaction and herding caused the plunge of exchange rates, asset prices and economic activity to be more severe than warranted by initial weak economic condition.
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