Financial Crisis And Its Effects On The Economy - 1337 Words

Financial crisis can be profoundly described in the example of the subprime financial crisis in the US. It includes causes and preconditions along with steps and options to rectify the situation, which makes it substantial for understanding the nature and consequences of most financial crises. This article is oriented on revealing the key reasons of economic downfall, ways to avoid or mitigate the situation, and the role of a business analyst in the situations of possible or factual crises. The background of the crisis that started in 2007 actually goes back to the period of 2004-2006, when large foreign investments came to the US attracted by the powerful economy with low discount rates at that period. Investments mainly originated from fast-growing economies in Asia and oil-producing/exporting countries and created an additional supply of money on the market that only intensified the housing and credit bubbles. Large amounts of additional money inflows from around the world into the US economy were also achieved through an innovative tool such as mortgage-backed securities, which derive their value from mortgage payments and housing prices (Bernanke, 2009). As the price’s decline happened and the housing bubble had burst, a lot of institutions reported great losses. Money supply had also stimulated the development of private financial institutions that were eager to give high-risk loans. During the first two years the loan rate was fixed, but increased significantly inShow MoreRelatedFinancial Crisis And Its Effects On The Economy Essay1593 Words   |  7 Pagesinvestment banks, two financial conglomerates, three insurance companies, and three rating agencies. Furthermore, all of these companies are working hand-and-hand, as a team, whose main goal is to increase their personal bank accounts, which are located in banks overseas, at the risk of their consumers and investors. All of this can arguably be seen as a result of the idiotic decisions made by those in the government who repeatedly denied that they could foresee a financial crisis happening, even thoughRead MoreFinancial Crisis And Its Effects On Economy1413 Words   |  6 PagesIn 1997, Asia financial crisis broke out. It brought a huge and negative influence on economy of Asia, even t he world economy. Financial crisis which is the value of financial assets decline, lots of financial institution out of business or stock market crash. Currency plays an important role in the market. It is a base that keep economic stability in the country. When currency change significantly, the country’s economy in turmoil. The financial crisis started from Thailand, and then PhilippinesRead MoreFinancial Crisis And Its Effects On The World Economy1467 Words   |  6 PagesBetween the years of 2007 to 2008, the world was faced with a major financial meltdown with global market failures and economies in shambles. The emergence of subprime mortgages and the collapse of securitized derivatives led to much speculation of different causes. What was the root factor that led to the triggering of this financial crisis? This research conducts a comparative analysis of my research and beliefs on the cause of the crisis contrary to other researchers’ conclusions. It is an aim to provideRead MoreFinancial Crisis And Its Effects On American Economy Essay1834 Words   |  8 PagesA financial crisis involves the value of financial institutions or assets dropping rapidly. It is often associated with a panic on the banks causing investors to sell off assets or withdraw money from savings accounts. This is the result of concern that the value of those assets will drop if left at the financial institution. As the crisis intensifies there is a significant change in the amount of risk that world financial markets are willing and able to accept. This results in easy credit conditionsRead MoreGlobal Financial Crisis And Its Effects On The Global Economy1900 Words   |  8 PagesIntroduction The global financial crisis had a profound on the financial markets leading to recession in a majority of advanced economies and massive growth declines emerging and developing economies. A financial crisis occurs when disruption increases asymmetric information in the financial system affecting efficient channeling of funds (Mishkin Eakins, 2012). The information asymmetry disrupts the transmission of funds from savers to productive investments and households. The profound natureRead More1.1. The Effect Of The Financial Crisis On The GCC National Economy: The United stated1300 Words   |  6 Pages1.1. The Effect Of The Financial Crisis On The GCC National Economy: The United stated financial crisis has greatly influenced aspects of the GCC economic and financial market. Generally the crisis leaded to a negative economic development, high unemployment rate across industries. Moreover the crisis has affected the overall liquidity level among GCC countries hence the regulatory bodies took all the measures to impose policies to reduce the negative effect of the crisis on their variousRead MoreWhy India Recovered Quickly From The 2008 Global Crisis Essay1594 Words   |  7 Pagesrecovered quickly from the 2008 global crisis? Vivek Shah MBA AF 629 December 12, 2016 Introduction It’s the most heard term about the global economy in the recent years and it’s the year we have been always hearing about its 2008. We all have been a part of it in some or the other way and all the major economies had been affected by the global turmoil which eventually lead to the worst situation after the Great depression of 1929. The sub-prime crisis in USA which lead to great recession whereRead MoreExploring the Contagion and Its Effect on Macroeconomic Conditions1452 Words   |  6 Pagescollateralized debt instruments featuring subprime mortgages, began to struggle. The result was a credit crisis, followed by substantial government intervention in the industry. This crisis then spread throughout much of the rest of the world. The contagion effect was driven by factors such as financial institution connectedness and exposure to the US economy. This paper will explore the contagion, and its effect on macroeconomic conditions both in the United States and around t he world. Body A contagionRead MoreWorld Economy Individual Assignment :1022 Words   |  5 PagesWorld Economy Individual Assignment-Baris Kayacan Fast economic conversion that Turley experienced after 1980 has made a significant effect on country’s whole economy and especially removal of obstacles in front of capital movements and integration of the country with global economy has increased the importance of financial sector as a whole . But this fast conversion made the economy vulnerable to crisis and Turkish economy experienced two devastating economic crisis in post 1980 era. In this reportRead MoreProblems Associated With The Financial Crisis1165 Words   |  5 Pagesinitial financial problems were concentrated in institutions exposed to mortgage securitization. But how it is that financial imbalances were transmitted into macroeconomic disruptions? What mainly channeled the crisis to other sectors was the resulting contraction in credit, of banks and other financial intermediaries. It is important to differentiate between the loss of financial actors associated with mortgages, which was the initially crisis, and the losses caused by the after effects, also called