Effects of Finanacial Crises on Nigerian Capital Market

Through my lifetime, I have witnessed the ever-changing world of business and the myriad of global and regional, socioeconomic and political changes accompanied with it. This has not only shaped my actual reality, but has also sparked a genuine interest in global affairs and International economics and finance. From events of the 2008 global financial crisis, to more recent events in my home country Nigeria, who is currently in an economic recession, triggered by a drop in oil prices and financial mismanagement, it is a given that the world is a reflection of global interrelations, and with this, I describe economics as the core of world discussion and finance as its driving tool. This is the reason I am determined to devote myself to the cause of developing an expertise in the interaction between politics, international finance and global markets with the hopes of contributing to the building of an accountable and democratic economy both at home front and on an international platform.

The financial crisis of 2007–2008, also known as the Global Financial Crisis and 2008 financial crisis, is considered by some economists such as Nouriel Roubini, professor of economics and international business at New York University, Kenneth Rogoff, professor of economics and public policy at Harvard University, and Nariman Behravesh, chief economist and executive vice president for IHS Global Insight, to have been the worst financial crisis since the Great Depression of the 1930s. All of them agreed that this is a “one in fifty years event”, however the latest Great Recession is not a typical cyclical recession of the World Economy and no doubt will last for more that usual two years (Business Wire, Reuters). The crisis played a significant role in the failure of key businesses, declines in consumer wealth estimated in trillions of U.S. dollars, and a downturn in economic activity leading to the 2008–2012 global recession and contributing to the European sovereign-debt crisis. (M. N. Baily, D. J. Elliott, 2009). So what are the cаuses of this crisis? Mаny factors dirеctly and indirectly caused the Great Recession, with expеrts plаcing different weights upon pаrticular causes. Major cаuses of the initial sub-prime mortgage crisis and following recession include: Internаtional trade imbalances and tax lending stаndards contributing to high levels of dеveloped

While 2008 neared its close, financial institutions capsized worldwide. Earlier that year the main American stock index, The Dow Jones, began a downward spiral that ended up peaking the following March; a historic market low comparable to its 1997 levels and despite a sizeable recession, the dot com bust, occurring in between the two troughs (1). More broadly, the International Monetary Fund recorded a 1.7% decrease in global GDP during the approximately two-year period (2). This global contraction of economic growth became known as the Great Recession, the worst financial crisis since the one that indirectly sent the entire world into yet another bloody war. Just like the Dow, the responsibility for this international calamity lurks behind American markets. This collapse is inextricably correlated with the burst of the American housing bubble and multiple subsequent bankruptcies that required Federal Reserve intervention to solve. Nonetheless, our government, through imposing limitations on shadow banking or not deregulating the banking sector in the first place, possessed the capability to prevent this financial disaster throughout its development.

The financial crisis that began in August 2007 has been the most severe of the post-World War II era and, possibly--once one takes into account the global scope of the crisis, its broad effects on a range of markets and institutions, and the number of systemically critical financial institutions that failed or came close to failure--the worst in modern history. Although forceful responses by policymakers around the world avoided an utter collapse of the global financial system in the fall of 2008, the crisis was nevertheless sufficiently intense to spark a deep global recession from which we are only now beginning to recover. Figure 1 shows the Recession periods in United States

The near-collapse of the financial system in the United States was the most substantial economic crisis in the U.S. since the Great Depression of the 1920s and 1930s. Since the crisis began in late 2007, more than 6 million Americans had lost their jobs, large and important financial institutions failed, and trillions of dollars in savings and retirement accounts had been lost. It is generally accepted that problems in the United States housing market are at the root of the current United States and global financial crisis. Regardless the causes and responsibilities, what is clear is that the result is a seriously weakened global financial system. It is important to thoroughly study the causes and consequences of the U.S. financial crisis and

The economic turmoil of 2008 is arguably the worst financial crisis since the great depression of the 1930s. Although financial crisis is not entirely new, each one is characterized by unique challenges that make it difficult to make a prediction on when and how the next financial crisis might occur. The financial crisis of 2008 to 2009 was marked by a failure in the efficiency of the financial markets, inability of regulatory bodies to regulate the financial product and was catalyzed by weak macroeconomic fundamentals prevailing at the time. In the aftermath of the turmoil financial crisis, there has been a debate in the financial community on whether there are specific indicators that precipitate a financial crisis and whether the global economy is at a risk of experiencing the a repeat of a financial crisis of a similar nature to the crisis of 2008. The

Just after ten years of Asian financial crisis, another major financial crisis now concern for all developed and some developing countries is “Global Financial Crisis 2008.” It is beginning with the bankruptcy of Lehman Brothers on Sunday, September 14, 2008 and spread like a flood. At first U.S banking sector fall in a great liquidity crisis and simultaneously around the world stock markets have fallen, large financial institutions have collapsed or been bought out, and governments in even the wealthiest nations have had to come up with rescue packages to bail out their financial systems. (Global issue)

Beginning June 2014, the price of West Texas Intermediate (WTI) crude has dropped from $105 per barrel to where it is now currently priced at $42 per barrel on November 2015, constituting a price decrease of more than 60% over a period of eighteen months. This price drop is due to an increase in oil production primarily coming from Saudi Arabia and Iraq along with the American shale plays that is causing an outward shift in the global supply of crude oil. With the short term demand for oil being inelastic, a moderate increase in supply will cause a large decrease in the market price. Basic intuition of an oil producing firm with enough market power to face a downward sloping demand schedule, OPEC, would have it so production is scaled back in order to drive prices back up to former levels, however, this is not the case of what happened. OPEC, along with its lead producing country, Saudi Arabia, has been producing at their maximum production capacity in order to saturate the market as much as possible and drive oil prices down even lower.

A collapse of the US sub-prime mortgage market and the reversal of the housing boom in other industrialized economies have had a ripple effect around the world. Furthermore, other weaknesses in the global financial system have surfaced. Some financial products and instruments have become so complex and twisted, that as things start to unravel, trust in the whole system started to fail.

The second week of October in 2008 was the worst week for stock market during 75 years, Buckley (2011) state that the worst record was the Dow Jones Industrial Averages dropped 22.1%, but it fell 44.3% then. In general, a financial crisis is not an accident; it may take several years and has complex and interlaced causes (Claessens and Kodres, 2014). The 2007-08 global financial crisis is a typical case due to long-term non-intervention policy and loose regulation for financial market from government. Moreover, it involved the complex relationship between government and financial institutions. In order to look at this issue in particular, this essay first goes though the timeline of the 2007-08 financial crisis, particularly in U.S. and

The Global Banking Financial Crisis 's and Its Impact on Developing Nations: Case Study Africa

The global financial environment has over the last decade experienced enough changes as can be witnessed from the key economic indicators. These changes have significantly impacted various stakeholders such as financial markets, money markets, capital markets and the general micro and macro economics players. Countries have been hit by recession and

The purpose of this paper is to describe the 2007-08 financial crisis in the U.S, it’s impact on world economy and why did it affect other countries of the world. Firstly, this paper will give information about the 2007-08 financial crisis in the U.S. and what were the main causes for it. The paper will discuss what impact the financial crisis had on different parts of the world and why did it have that impact. At the end, this paper will discuss which countries were the most affected by the financial crisis.

Financial markets are in need of stronger regulation and higher penalties for infringement, nevertheless the main challenge for most countries is the implementation of the international regulations. The crisis is the result of different factors. This essay will analyse firstly, some of the factors that contribute to globalisation of the markets. Secondly, how these factors led to the financial crisis of 2008 and how the crisis developed. Thirdly, it will analyse the changes made regulation wise in order to try to mitigate the crisis and avoid another crisis of this magnitude.

The activities above led to the investigation, of the Stock Exchange, Capital Market Operators, some Issuers of Securities and the companies whose shares started rising when there were no fundamentals to support them.As the global crisis deepened, the foreign investors decided to exit the Nigerian capital market, by off loading their large volume of shares into the market. The market got saturated with shares without corresponding buyers. On the part of the retail investors they could not catch in to take profit as share certificates were not being issued promptly and the process of certificate verification at the Registrars offices took so long to be completed. Since the retail investor could not exit and there were no willing buyers, share prices across the market started plummeting. Very many investors lost out as the good fortune which they saw passed them by. The activities above led to the investigation, of the Stock Exchange, Capital Market Operators, some Issuers of Securities and the companies whose shares started rising when there were no fundamentals to support them.As the global crisis deepened, the foreign investors decided to exit the Nigerian capital market, by off loading their large volume of shares into the market. The market got saturated with shares without corresponding buyers. On the part of the retail investors they could not catch in to take profit as share certificates