R ESEARCH D ESIGN

The research design is used as a combined account of our planned research methods. Off course the design must be designed in such a way that it best enables us to answer our stated problems.

Therefore the design must at all times uphold its logical connection with our statement of problem.

Figure 2: The Knowledge Production Processes

Source: Ib Andersen, p. 29

Even though this connection with the purpose of our thesis is of highest priority, other constraints imposed on us have inevitably contributed to the molding of the research design. Essential factors in this regard are the scarcity of time, i.e. our deadline is due probably way before the SCC is over and capital which constrains us from conducting research that requires excessive amounts of either or both of these resources.⁴

In this thesis we will conduct our analysis on the basis of deductive knowledge creation. This entails that we on the basis of general principles are able to draw conclusion on individual cases.⁵ Before we continue with an account of our method of choice we need an identification of objects that need study according to our statement of problem. The essential objects are in this case: The

4 Den skinbarlige virkelighed, p. 139

5 Valg der skaber viden – om samfundsvidenskabelige metoder, pp. 101-113

The Subprime Credit Crisis

39 macroeconomic reasons for the SCC, behavioral mechanisms of borrowers and lenders and the LOLR.

Figure 3: Fields of Object

Source: Own Making

The fields of object affect the choice of data on which we will elaborate more in the coming section.

6.1.1 Data

Roughly speaking there are two sets of data categories: primary- and secondary-sources. Primary data is a common definition of the set of data which is produced by the scholar himself. Secondary data however, is produced by others and is readily available for use.⁶

A further distinguishing feature between data is the partition into quantitative and qualitative data.

Given the delimitation in this thesis we are compelled to resort to secondary data as the means for gathering information thus refraining from conducting any research studies of our own. The reasoning behind this decision is that the work would become redundant due to the myriad of data on the SCC in the US which is more than enough to work with. Thus we are able to devote more resources on actual treatment of data rather than retrieval.

7

6 Den skinbarlige virkelighed, p. 195

7 Problemorienteret projektarbejde, p. 152

Behavior of Subprime Lenders and Borrowers Subprime Credit Crisis

Lender of Last Resort

The Subprime Credit Crisis

40 The choice between these two depends on the kind of problem that is at hand. We have utilized data of both types as we have deemed them both necessary for the working process.

The secondary data used throughout this thesis is retrieved via several sources. Working- and scientific papers and books are used for a more theoretical approach whilst articles and web pages are used to get more up to date and targeted information. This is especially important as the crisis is going on at this very moment and day to day updates therefore increase in importance.

Some of the works are physically at hand whilst the majority is obtained via the Internet. Important web pages in this regard are the big financial papers, news associations, web pages of federal institutions and statistical databases.

However, we wish to emphasize the necessity of obtaining credible information through these information channels. The scientific nature of this paper will be protected by the sole use of published works from the hands of credible authors and news sources.

6.1.1.1 Critique on Data

Literature on financial crisis is often characterized by being highly influenced by the school of thought of the author. Monetarists present their view on the SCC and indirectly, and some times even directly, criticize the viewpoint of the Business Cycle School and vice versa. The same applies for literature on LOLR. It is therefore important to have a critical stance on the retrieved data and literature. This we have accomplished in two ways. Where possible we have sought out our own data in data bases so as not to be influenced by the interpretations of others. Secondly we have examined the sources used in our literature thereby bypassing the potentially subjective opinions of authors.

Due to the actuality of the SCC, journalists, other writers and yours truly do not have the benefit of hindsight in regards to capturing all aspects of different fields within the SCC. Thus it is important to have a critical eye on published works and articles in this regard.

6.1.1.2 Reliability and Validity

The quality of our data is determined by the extent of reliability and validity. Reliability is a measure of the uncertainties connected to our data and thus the extent to which our findings are

The Subprime Credit Crisis

41 accurate. Validity measures the level of interconnectedness of the chosen theory and empirical data and the relevancy of the empirical data to the research questions in our problem statement.⁸