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the causes that lead to the crisis and discuss how it has affected the New Zealand financial system and economy. - Essay Example

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Author : gerlachmicaela


Finance and Accounting Global Financial Crisis: Impacts on New Zealand (College) Global Financial Crisis: Impacts on New Zealand Introduction The global financial crisis began to show its influx in the middle of 2007 and later spread into the whole 2008…

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the causes that lead to the crisis and discuss how it has affected the New Zealand financial system and economy.

However, even wealthiest governments were forced to declare diverse rescue packages in order to bail out and thereby ensure the safety of their financial systems. The decade witnessed a series of collapses in the American banking sector, which were directly attributed to the crisis. The most challenging issue associated with the global crisis was that the institutions responsible for the financial difficulties were the ones being largely bailed out. This paper intends to explore the major causes that led to the crisis and how it affected New Zealand’s financial system and economy. Facts of the financial crisis Davies (2009) says that the financial crisis widely struck the global financial markets and its first impacts were seen in the United States’ sub-prime mortgage market. As a result of this crisis, the prices of bonds and other financial assets were considerably declined by which the generated losses largely hit the financial system. In the view of Davies (2009), in this period, number of financial institution underwent bankruptcy mainly due to the collapse in credit; this situation adversely affected the economic confidence of business houses/entrepreneurs and thereby the overall economic growth of nations. A gigantic expansion in credit and asset prices just prior to the collapse increased its severity. ...
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