Date of Conferral
2023
Degree
Doctor of Business Administration (D.B.A.)
School
Management
Advisor
craig Martin
Abstract
Many banks’ executives lacked strategies to mitigate the risk of default on subprime mortgages and their linked derivatives to prevent bank insolvency. This led to severe financial losses and insolvency of many banks in 2008-2009. Grounded in the corporate governance agency problem and stewardship theories, the purpose of this qualitative multiple case study was to explore (CG) strategies some bank executives implemented to mitigate the risk of default of subprime mortgages and their linked derivatives to prevent bank insolvency. The participants were four bank executives who worked for federally insured banks in Colorado. Data were collected from semi-structured interviews and a review of archival documents from U.S. government sources, like the Federal Deposit Insurance Corporation. Thematic analysis was used to analyze the data, and four themes emerged: (a) excessive risk-taking, (b) riskiness and complexities of mortgage-backed securities (MBS), (c) no capital reserves for massive subprime defaults, and (d) moral hazard. A key recommendation for bank executives is to set up a protocol to monitor the selling process of subprime loans and MBS, emphasizing the suitability and affordability of the loans to the consumers to protect the banks from losses or insolvency. The implications for positive social change include the potential for bank executives to act in the best interest of stakeholders to avoid the insolvency of financial institutions and banks.
Recommended Citation
ABDELMOUMEN, OTHMAN, "Strategies for Mitigating U.S. Banks’ Risks from Exposure to Derivatives and the Underlying Assets" (2023). Walden Dissertations and Doctoral Studies. 11596.
https://scholarworks.waldenu.edu/dissertations/11596
