Thesis: Market Failure and Lehman Brothers

Sample Thesis Paper

All markets strive for the perfect market structures in order to operate in the most efficient possible manner. In theory as well it has been discussed that markets fail when the markets are run inefficiently and the perfect market stage is not reached through perfect competition. However this theory cannot be applied to the real world as there exists nothing that can be termed as perfect in nature. Similarly all markets that operate in the world globally as well as regionally are imperfect in some form or the other as perfect competition and a perfect stage for a market cannot be reached as a result in the real world, it is easy and imminent for markets to fail.

Markets fail when they operate in an inefficient and in an ineffective manner. The Lehman Brothers failure and the resultant failure of the financial capital markets across the world can also be attributed to the inefficiency of the markets and the lack of government intervention. Starting 2006 the failure of the housing and estate mortgage markets in the North America and Europe was evident due to lending of mortgage loans to the subprime markets. Similarly the Lehman Brothers also had to face the subprime mortgage crises where loans and mortgages were provided to the subprime market that could not repay the loans and debts being written out to them. The implementation of this lending strategy that was only halted in august 2007 gave a string push to the operations of the Lehman Brothers in order to make it inefficient at turning profitable revenues.

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