Real Estate Financial Innovation and Risk Management Analysis on American Subprime Mortgage Crisis

This paper briefly discusses the relationship between financial innovation and risk management, introduces studies on the subprime mortgage crisis at home and abroad and analyzes the crisis from the perspective of real estate financial innovation and risk management. Detailed analysis is made about financial innovations in real estate sector over the recent dozens of years in America from the aspects of system and financial tools with actual examples. Then the paper comments on achievements and defects of the innovations and analyzes risk management in financial innovation in the fields of risk management mechanism, risk management problems and eruption of crisis. Finally, the paper concludes that the subprime mortgage crisis is a typical example of imbalance between real estate financial innovation and risk management and suggests that proper attentions should be paid to both financial innovation and risk management so as to achieve a balanced development of them.