Falling house prices generate widespread insolvency of financial institutions by:

Question

Quizplus · Accepted Answer

Falling house prices reduce the value of collateral assets, which means the value of the assets that were providing security for loans and other financial instruments is also decreasing. This can lead to insolvency of financial institutions as their assets are worth less than what they were valued at when the loans were made, leading to defaults and losses.

Falling House Prices Generate Widespread Insolvency of Financial Institutions By