This document summarizes a case study on the 2008 credit crisis submitted by Varda Shaikh. The case study analyzes research by Jonathan Jarvis explaining how risky subprime mortgages introduced into the financial system due to risky lending practices led to the crash of the whole financial system. The research aims to demonstrate how the leverage system caused the crisis by making everything connected, and that preventing such crises requires stopping excessive leverage early. The analysis will be strengthened by visualizing the problem using system dynamics software.

1. NAME: VARDA SHAIKH
I.D: 1310-BBA027
SEMESTER: BBA VI
SUBJECT: SYSTEM DYNAMICS
CASE STUDY ON: CREDIT CRISIS BY
JONATHAN JARVIS
SUBMITTED TO: MAM HUMMAIRA
1. INTRODUCTION:

2. i. Topic: Credit Crisis by Jonathan Jarvis.
ii. Introduction: the defaulted home owners i.e. risky subprime mortgages
were introduced into the market due to the risky lending and crashed
down the whole financial system.
iii. Background: Federal Reserve Bank lowered the interest rate to 1%, as a
result of this commercial banks then started assessing cheap credit and
entered into circular system of housing market.
iv. Research problem: the given research paper shed the light on how the
leverage system dropped down the whole financial system resulting in
the bankruptcy.
v. Scope: Jonathan Jarvis explained what happened during the 2008 credit
crisis by demonstrating how the housing market has changed in the past
years.
vi. Importance: it is important to solve because it is pointing out how
leverage system became the cause of credit crises, showing it is circular
in nature and everything is connected with everything. So before the
things getting worst, we have to stop this at initial stage.
2. LITERATURE REVIEW: the other researchers mostly used the hypothesis
and their assumptions to describe the problem and the rest of them
used past researches of other researchers. But here I’musing vensim
software to visualize the problem in a better way to make my research
more strong than others.
3. ANALYSISPHASE:

3. 4. CONCLUSION PHASE: in that part as I can see the debt
accumulation (using the leverage system) is the main cause of the
financial crisis affected the whole economy, resulting in
bankruptcy.
Policy suggestion: as a modeler as per my suggestion is required I
would say instead of leverage system, the government should use
public money system proposed by the American monetary act.
According to this system the government should collect the
money from its people in the form of taxes and spend that taxed
money onto them for the welfare. Hence, it is better to taxed
than to borrow.
THE END