Thursday, December 15, 2011

How have information systems affected the current financial crisis?

hello, if someone could help me out, I'd appreciate it. What's the role that info. systems have played in our current financial crisis? Or how has the financial crisis affected information systems? Links would be helpful. Thanks :)|||Info Systems help identify the extent of the crisis more quickly than otherwise we would. Without the IT systems in place, we would not have found out which banks had problems so fast, once we recognised the problem. Just think the complexity of some of the mortgage-backed securities (MBS), they are really complex because they are essentially repackaged pools of mortgages that have been bought, sold, bought and resold. IT systems helped track all these transactions.





Unfortunately, it is also the availability of sophisticated financial software and tools (on info systems), that allowed the possibilities of trading these MBS in the first place, including the existence of credit rating systems to link these. The speed of financial transactions causes the traders to buy and sell at high speed, where previously each one had to be painstakingly assessed and analysed. Doesn't mean slow prevents crisis - think 1930's depression. Today's crisis is only more widespread!





One observation is: we cannot go back anymore, but have to proceed forward. So the suggestion is to improve on the process - hence the current thinking about more regulation, which essentially is a set of better rules to make sure it does not happen again. Any set of rules, can and will always find itself into information systems.





The cycle continues....

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