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Seminar paper from the year 2012 in the subject Business economics - Operations Research, grade: 1,3, University of Applied Sciences Bielefeld, course: Multinational Business Finance, language: English, abstract: Financial crisis, a phenomena or a part of an economic and financial cycle which occurs when ...bankers, traders, and other financiers periodically played the role of arsonists, setting the entire economy ablaze. (Cassidy, 2008) In the following we will take a closer look on the Financial Instability Hypothesis (FIH), it will be examined in what extent Hyman Philip Minsky (H.P.M.) predicted the financial crises in his theories and whether it can be proved or not by setting his theoretical aspects in comparison to the late occurrences of the Sub-prime crises. After giving the most important facts about H.P.M., his Financial Instability Hypothesis will be summarized and illuminated with its main aspects. Subsequently this hypothesis will be analyzed concerning essential theories that had much impact on his instability thesis, for instance The General Theory (TGT) of the economist John Maynard Keynes. Additionally the formation of financial crises will be illustrated with regard to Minsky's assumption of three different types of asset holders. The Hedge-, the Speculative- and the Ponzi-debtor will be defined and explained concerning how they influence the business-cycle and could lead to a destabilized financial market. With hindsight the Sub-prime crises of 2007, which can also be defined as a financial crisis, main aspects of the development on the financial market and within the economy will be indicated to illustrate the so called Minsky Moment . In the end the conclusion implies not only Hyman Minsky's advice and solution to avoid another financial crisis in the future but also our opinion upon Minsky's Instability Hypothesis and its significance with regard to the overall question of: How far does Hyman P. Minsky's Instability Hypothesis eluci

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