The stock markets worldwide were dipping, large financial institutions were crumpling, and governments had to prepare bailouts of the biggest financial institutions. A global financial meltdown affected the lives of almost everyone in the global world.
It is said that history repeats itself. Crisis began with sub-prime lending crisis and whole financial system was engulfed.
Sub-prime crisis refers to the crisis faced by the mortgage companies that were in loaning business that due to adverse situations ran in trouble. As a result the Essay about world economic crisis of defaulters increased resulting in huge bad debts for the mortgagee companies.
The liquidity is engulfing the whole world and taking the shape of financial famine. In the period of strong global growth growing capital flow and prolonged stability market participant sought higher output without an adequate calculation of the risks and failed to exercise proper due diligence.
Weak underwriting standards, unsound risk management practices increasingly complex and opaque financial products and consequent excessive leverage combined to create vulnerabilities in the system.
At the same time what looked as brisk-effervescence is financial market ended up in becoming alarm ringer for a greater catastrophe in the coming years.
Apart from expansion the deepening of financial markets occurred for most of the courtiers in recent times. The growths in financial capital asses for the countries have been much faster than the respective countries GDP growth.
South financial times sector where the financial depths have increased to more than times the GDP of these countries. However, the financial capital assets have surged manifolds for the countries such as new emerging economics of Asia Russia, Eastern European countries and some of the Middle East countries thought are late entrant.
Many factors have contributed to the countries success in reaching such a phenomenal increase. One of the major reasons for the expansion in financial markets is the efficiency brought about the natured capital market growth. This rendered facilitated corporate borrowing.
It increased the corporate borrowing through issuance of shares public traded bonds the securities by these companies in the capital market. Apart from increased issuance of public traded bonds, shares and equities the increasing valuations of the companies and foreign investments have helped the countries in escalating the role and importance of capital market.
Apart from the above mentioned factors, globalization also helped in enhancing the role played by foreign investment in the spreading the financial sector growth to other peripheral nations that were outside the core hub of new financial capitalization.
Whereas role of foreign institutional investment FIIs that invests thorough capital market for short term gains directly impact the capital market deepening.
The foreign direct investments FDIs directly invest in countries for long term financial prospects.
These have increased the financial market deepening as well. The FDI investment in developing countries bring in with the greater financial habits. US and European markets are known to be financial capital market hub and have greater exposure to the secondary and derivative market operations.
Besides increasing the financial growth its operation in FDIs help in increasing the valuation of the companies in the emerging market like China, India and other Asian countries as these FDIs are mainly from US and Europe.
To be more precise the investments from eh developed countries with their investment in the emerging of developing countries are from the big Trans national corporations that have stronger foothold in world capital markets. Thus any kind of investment either through opening of wholly foreign investment venture or joint ventures with domestic companies of the developing nations help in greater valuation of the companies world stock market increasing overall capitalization.
However, there is a significant difference between the composition of financial capital assets between the more natured economics and some of the nascent economics. While the increasing in financial assets is more due to increases in banking deposits representing an immature financial system in emerging economies such as China.
The largest contributor of increasing financial assets in natured economies especially like UK and US is the increasing role of equities of and securities and other corporate bonds.
Nevertheless the fact cannot be undermined that in more recent times, the issuances of bonds and securities in emerging markets have seen a surge in financial capital. USA has played a major role in financial capital market deepening both within the country and outside the country i.
Also the US foreign investments in overseas capital market have also played an important role in achieving greater financial integration.Current global economic crisis impacts all the people currently working and in need of work and the purpose of this essay is to introduce relevant causes of this crisis for the general public to become aware of the roots of problem and better understand it.
The essay will first place the possible causes that led to the downturn in the financial position of the various economies across the world and finally it will talk about the methods that UK government can adopt to prevent itself from the hazards of .
"Asian crisis was a regional net-work event, a traditional banking cum currency crisis." 'Asian crisis was a crisis at the periphery, when the center was strong.
But the crisis erupted in was witnessing a financial crisis at the center, and its shocks spread like a tsunami in both financial and real economy. * An economic crisis is A situation in which the economy of a country or countries experiences a sudden downturn brought on by a financial crisis.
A financial crisis is a situation when money demand quickly rises relative to money supply. The Global Economic Crisis Essays. In the late s, the World suffered from a big global economic crisis which caused “the largest and sharpest drop in global economic activity of the modern era”, in which “most major developed economies find themselves in a deep recession”, according to McKibbin and Stoeckel (1).
The current global financial has spawned a renewed interest among economists and policymakers to identify its causes and to come up with possible solutions.