Journal of International Business and Economics

No Real Estate Bubble Preceding Global Financial Crisis: Eddison Walters Risk Expectation Theory of the Global Financial Crisis of 2007 and 2008
Dr. Eddison Walters, DBA; Dr. Borivoje Djokic, Ph.D

Abstract
The lack of evidence in support of the widely held theory of a financial and real estate bubble, which was responsible for causing the Global Financial Crisis of 2007 and 2008 inthe literature, raised serious questions regarding the recent financial crisis that required additional research. A financial bubble, defined as protracted divergence over a period between an asset market price, and the fundamental determinants implied value with an unusually high volume of trading or sales (Starr,2012). Walters (2018) presented evidence which suggested there was no statistically significant evidence of change in the growth of net FDI inflow for developed countries for periods preceding and subsequent to the Global Financial Crisis of 2007 and 2008. The development of Eddison Walters Risk Expectation Theory of the Global Financial Crisis of 2007 and 2008, in Walters (2018) presented an alternative theory for the cause of the Global Financial Crisis of 2007 and 2008. This new theory raised severe questions regarding Alan Greenspan’s statement, which pointed to an abundance of available capital creating a financial bubble as a condition that led to a real estate bubble in the United State housing market, triggering the Global Financial Crisis of 2007 and 2008 (Greenspan et. al ,2010; Khayoyan, 2012). Considering new questions raised by Walters (2018), an investigation into what triggered the Global Financial Crisis of 2007 through 2008 is required. It is critical to gain an understanding of precisely what triggered the financial crisis to avoid the same mistakes in the future.

Full Text: PDF     DOI: 10.15640/jibe.v7n2a1