The development of post modern society is mainly led by effect of globalization that has also influence entire human activities and their lifestyles. In case of trade and business, the world economies have experienced tremendous growth…
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The development of post modern society is mainly led by effect of globalization that has also influence entire human activities and their lifestyles. In case of trade and business, the world economies have experienced tremendous growth.With this change due to globalization, the thought process of people has also significantly influenced and they have realized their priorities In case of trade and business, the world economies have experienced tremendous growth. The policy makers realized the necessity of interdependence and co-operation in encouraging the international trade. International trade has a number of advantages like exchanges of necessary resources like capital, human resources, technology etc. The emergence of international trade necessitates the role of financial institution at global platform and now, the world economies engaged in international trade relation have the opportunity of share their risks with other economies. However, this can also be viewed as major disadvantage of international trade as crisis in the major economies soon spread over other related economies. This can be explained thoroughly using the latest evidence of the global Financial Crisis of 2008 (Mullerat, p.135-137). The Financial Crisis of 2008 was emerged in Western first world countries like United States, Canada, the European countries United Kingdom, Germany, Span, France etc and the influence of crisis in these economies soon impacted the entire international market directly as well as indirectly. There is a debate over the origin of this financial crisis and major reason behind this crisis. This paper will attempt to deal with the same by discussing on the principal cause behind the financial crisis. However, at first a brief description of Financial Crisis of 2008 and its background will be presented to understand its nature. Next, the root cause of the financial crisis will be explained followed by role of the agents of financial crisis will be explained in intensifying the crisis. Finally, the overall discussion will be summed up in the conclusion followed by a set of plausible recommendation. 2. Background of Financial Crisis of 2007-2008 A recession period can be declared by considering the depressing economic growth, reducing the market demand as well as GDP, industrial production, reducing flow of resources etc. As per the economic theory of business cycle, there are four cyclic phases of an economy i.e. slump, recession, recovery and boom and these phases including the recession are quite normal for any economy (Hubbard, p.310). However, in case of financial crisis of 2008, many scholars have defined it as unnatural crisis and did not belong to the normal business cycle as they believe due to unconventional activities of financial market this crisis was forced to impact entire world economy. The financial turmoil was first detected in the first world countries like USA, and other developed countries of Europe and these countries were the major victim of this crisis. Prior to this financial crisis of 2007-2008, the entire Western financial market was enjoying the boom period and many have identified that this global downturn was an effect of constant negligence. When it crossed the limit, a number of multinational corporate giant collapsed and its immediate effect fell on entire financial market. This global downturn is termed as the financial crisis as this recession was mainly led by financial market that caused financial crunch during 2007-2008. This crisis also termed as the sub-prime mortgage crisis as the risks due to sub-prime mortgage is the main technical reason for this crisis. “
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“The Principal Cause of the Financial crisis:Corporate Governance Term Paper”, n.d. https://studentshare.org/macro-microeconomics/1427819-the-principal-cause-of-the-financial-crisiscorporate-governance-failure-financial-crisis-of-2007-2008.
The discussion will be summed up in the conclusion followed by a set of plausible recommendation. The financial turmoil was first detected in the first world countries like USA, and other developed countries of Europe and these countries were the major victim of this crisis. This crisis also termed as the sub-prime mortgage crisis.
2008 Financial Crisis
Until the start of the financial crisis in August 2007, the world was experiencing strong economic growth (Obstfeld & Rogoff). Investors and consumers were optimistic in their expectations, which reflected itself in high consumption and investment rates.
One way to get rid of this situation was to take help from the International Monetary Fund, but still there was doubt whether the Hungarian economy could get back to its previous situation (Horvath, 1). Hungarian Weaknesses The Hungarian Financial Crisis which occurred in the year 2008 was not due to frustration or fright.
Major economic analysts from these developed states were gathered to analyze the status of banks, insurance and other depository financial institutions. Nevertheless, a financial crisis in banking systems implies a global financial crisis. Majority of countries were aware of the situation and reconsidered making radical changes in their banking systems adjust to the unfavorable situations.
Introduction 3 2) Types of Financial Crisis 3 3) Causes of Financial Crisis 7 4) Prevent Financial Crisis 9 4) Conclusions 10 References 11 1. Introduction Financial crisis is a term used to identify events and situations where an entity such as a bank, financial institutions, and the stock market will suddenly see a devaluation of their assets.
The Level of Openness of the GCC countries 9 3. Research Objective and Question 10 4. Research Methodology 11 5. Findings 12 5.1 Impact of Crisis on GCC countries 12 5.2 Impact on Qatar 15 6. Analysis 16 7. Conclusion 18 Reference List 19 Appendix 21 Abstract The irrational behaviour of the officials of the real estate market resulted in the financial crisis, which was a hard blow to the global financial market.
The last three decades saw Asian economies over achieve from the perspective of Economic Growth, this was known as the “Asian Miracle”. Countries like Thailand, Malaysia, and Indonesia witnessed tremendous economic growth in the late 1980s, but all this came to an abrupt end due to the financial crisis in Asia which severely affected the Economies of these countries.
More than that, the crisis itself went out to international political level that concentrated on the timeless clash between debtors and creditors within the world economic sphere.
At the moment when economy starts to cry the thing creditors care about is
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