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Financial Crisis 2007-2010 - Article Example

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This essay "Financial Crisis 2007-2010" explores the origins and provide background information about the recent financial crisis. Author of the paper suggests that equality and fairness in the development of economies globally would be the most effective measure for eliminating the chance of similar recessions in the future…
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Financial Crisis 2007-2010
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Download file to see previous pages The origins of the recent financial crisis are critically discussed in this paper. The literature published on the particular subject is presented aiming to show the different approaches used for the explanation of the crisis as a series of events, which caused severe turbulences to economies worldwide. The potential differences in the arguments used for explaining the crisis reveal the following fact: even after its end, the above crisis has not been fully understood, in all its aspects. The fact that certain theorists set the end of the crisis in 2009 while other estimates the end of the crisis in 2010 is another proof the misunderstanding in regard to the actual forms and the effects of the specific crisis.
Theorists and researchers worldwide have used different approaches in order to evaluate the origins of the crisis. In accordance with Kolb (2010) the recent crisis has been the result of the use of various methods for masking risk aiming to promote particular financial products (Kolb 2010, p.79). The turbulences in the prices of the assets on which these products were based have forced these methods to be revealed; however, then, it was too late for the crisis to be confronted. In other words, the development of the crisis has been related to the practices that financial institutions used in order to increase their customer base; even if employees in these institutions were aware of the risk involved, they had managed to mask this risk by giving emphasis on certain characteristics of these products, for example, the potential of the customer to choose the number of instalments or the level of interest.
In a report published by the World Bank in 2009, it is noted that the origins of the global financial crisis of 2007-2009 can be identified in ‘the economic growth of the years 2003-2007’ (World Bank, 2009, p.94); i.e. the crisis of 2007-2009 is considered to have its roots in the economic decisions of the pre-crisis period, a claim which leads to the assumption that the crisis was unavoidable. ...Download file to see next pagesRead More
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