Financial Management And Financial Crisis

In 2008, the world experienced a tremendous financial crisis which rooted from the U.S housing market; moreover, it is considered by many economists as one of the worst recession since the Great Depression in 1930s. After posing a huge effect on the U.S economy, the financial crisis expanded to Europe and the rest of the world. It brought governments down, ruined economies, crumble financial corporations and impoverish individual lives. For example, the financial crisis has resulted in the collapse of massive financial institutions such as Fannie Mae, Freddie Mac, Lehman Brother and AIG. These collapses not only influence own countries but also international area. Hence, the intervention of governments by changing and

Financial crisis is really a major concern for all economies in the world. Every time a crisis occurs, companies, banks and financial institutions should draw their own lessons, because if the lessons are not recognized, they may still go on the trail of failure of

A financial crisis is a condition, for various reasons, an organization or organizations lose a vast part of their worth. In many segments of the economy, a financial crisis happens all the time. The terms financial crisis and economic crisis are not interchangeable. The total economy is affected by an economic crisis. A financial crisis may only affect one part of the economy and not have any effect on the other parts of the segments. The financial crisis which began in 2007 was the beginning of a downward spiral for the United State economy

A financial history well known for centuries’, financial institutes and analytical agencies all over the world spent millions dollars each year to research and prevent economic problems such as recession, inflation and the worst one, worldwide crisis. The United States has the strongest economy in the world with the well-developed financial sector and probably the strongest analytical center. However, it was not enough to prevent a financial crisis in 2008. For the last decades US economy consistently increased housing price on the market thus by the end of 2005 early 2006 prices reached the highest point ever in US history which pushed default rates up. Within few months’ price boom was over and US economy slightly turn over toward long term mortgage crisis which coincided with national recession between 2007-2009 and aggravated the situation. There were many causes of the crisis such as shortcomings of financial institutions, political situation in the country and so on, but there are only three main proximate causes, the mortgage crisis in US was triggered by house bubble on the property market, unsustainable risk increase and unstable system in financial sector.

The Global Financial Crisis, also known as The Great Recession, broke out in the United States of America in the middle of 2007 and continued on until 2008. There were many factors that contributed to the cause of The Global Financial Crisis and many effects that emerged, because the impact it had on the financial system. The Global Financial Crisis started because of house market crash in 2007. There were many factors that contributed to the housing market crash in 2007. These factors included: subprime mortgages, the housing bubble, and government policies and regulations. The factors were a result of poor financial investments and high risk gambling, which slumped down interest rates and price of many assets. Government policies and regulations were made in order to attempt to solve the crises that emerged; instead the government policies made backfired and escalated the problem even further.

The Global Financial Crisis of 2007-2008 is the worst financial crisis since the 1930’s The Great Depression (Reuters, 2009). Even if bailouts of banks by national governments prevented the collapse of major financial institutions, worldwide stock markets continued to drop. Evictions and foreclosures overwhelmed the housing market while severed unemployment embraced the labor market (Baily and Elliot, 2009). This global financial crisis was responsible for the decline in the consumers’ wealth, and contributed to the great recession and European debt-crisis (LA Times, 2012). Varying opinions have been suggested to address the origin of the global financial crisis including conflicting of interests, complicated financial instruments,

The Financial crisis of 2007 was one of the largest crises the world had faced since 1980, which almost brought the economy of one of the strongest and largest country, USA, to a near collapse in 2008/9. It was triggered by the housing bubble bust, which had taken place due to the creation of toxic subprime mortgages. The increase in irresponsible lending, as well as extreme borrowing through the use of exceptional securities, made the economy highly geared. With a reality being uncovered, of the reckless borrowing and lending by large financial institutions, the curtains came down quickly.

The vulnerabilities in the financial system transformed into a recent crisis. The decline in housing prices let to very severe forms. There are several reasons, which affected the severity of it, including the excessive debt taken on borrowers, reliance on short term fundings, banks didn 't have an efficient system to monitor the risks, the international housing bubble and the crisis in other countries let to acquiring safe dollar assets, the lending standards were inadequate, financial institutions did not have serious supervision by any financial regulators, and people were too optimistic about the economy.

When analyzing causes of the global financial crisis and its specific symptoms, it is clear that the deepening of globalization processes and high level of internationalization of the world economy determined the significant losses of national financial systems and slowed down their development.

According to the specialists, there are many reasons for this global financial crisis. We try to focus some prime reasons behind this

The financial crisis from 2007 has caused the greatest global economy recession since the Great Depression and also the European sovereign debt crisis. The consequences and cost are enormous. Due to this fact,

The subprime mortgage financial crisis which happened in 2008 to 2009.this crisis leaves the world in frightened. Therefore financial economy is totally unable to regain on the same situation. However to control the economy crisis and to avoid in the future for such situation we need to review and need to avoid this situation.

In 2008, the world experienced a tremendous financial crisis which is rooted from the U.S housing market. Moreover, it is considered by many economists as one of the worst recessions since the Great Depression in 1930s. After bringing a huge effect on the U.S economy, the financial crisis expanded to Europe and the rest of the world. It ruined economies, crumble financial corporations and impoverished individual lives. For example, the financial crisis has resulted in the collapse of massive financial institutions such as Fannie Mae, Freddie Mac, Lehman Brothers and AIG. These collapses not only influenced own countries but also international scale. Hence, the intervention of governments by changing and expanding the monetary

Financial Crises are well-known phenomena in economics history; however, after the Great Financial Crisis of 2007-2009 the role that Central Banks play in order to prevent Financial Crises has been questioned. To begin with, it is important to understand that crises consist of highly complex macro-financial linkages that reflect the interactions between the financial sector and the real economy (Claessens 2012). Additionally, it is important to highlight two different financial crises groups: Currency and sudden stop crisis, which have strictly quantitative definitions; and debt and banking crises that depend on qualitative and judgmental analysis (Claessens 2012). Nevertheless, the interconnectivity of the financial sector demonstrates that major crises are a blend of the different types; thus, the effects on real economy are larger (Laevene 2008). In consequence, governments and central banks have the responsibility to develop monetary and macro-prudential policies to appropriately supervise and regulate the financial industry (Norgren 2010). However, central banks have failed to appropriately understand the main symptoms that precede financial crises: credit booms and asset booms (Bijapur 2015). In fact, it is essential to comprehend these symptoms in order to develop policies that strengthen the fragility of the financial industry; hence, upholding stable growth and inflation.

The banking industry has always been susceptible to economic fluctuations. The subprime mortgages crisis, that started to be felt in 2007 and is still going on, is not an exception. Although it had consequences all over the world, the main effects were seen in American financial markets, followed by the European ones. The top ten banks of the world also suffered the consequences; these can be seen in the changes occurred among these leading institutions in terms of market capitalization and also total assets. After several years of believing in free markets, capitalism and no government intervention, the whole scene has changed. During this period, the governments, acting together with their respective central banks, assumed