Financial crisis Term Paper example
Undergraduate
Term Paper
Finance & Accounting
Pages 8 (2008 words)
Download 0
Running Head: FINANCIAL CRISES Title: Financial Crises, types, causes and prevention Name of the Student: Name of Institution: October 17, 2012 Table of Contents Title: Financial Crises, types, causes and prevention 1 Name of the Student: 1 Name of Institution: 1 October 17, 2012 1 1…

Introduction

In such a situation, the entity would face liquidity problems, have cash flow problems, and see the net worth decreasing. If it happens to a market or a bank, then there would be panic selling that further brings the prices of stocks down. There would be a run on the banks with a large number of people attempting to withdraw cash. Assets would lose their valuation. Depending on the severity of the crisis, the market would recover in a few days or the ill effects would persist for a few years. A financial crisis is followed by recession and a general slowdown of the market. Financial crisis can even happen to individuals and businesses and such entities cannot pay their bills, they cannot pay their employees and their business would be repossessed. Recession is said to follow financial crisis and when the GDP becomes negative for two quarters, then the nation is said to be in recession (World Bank, 28 June 2012). This paper examines the subject of financial crisis and discuses various types, causes and method of preventing such a crisis. 2) Types of Financial Crisis Financial crisis usually results in a notional and ‘on paper’ wealth of a firm. If the firm has retained its assets and other infrastructure then after the crisis is over, it can regain its previous position in the market. ...
Download paper
Not exactly what you need?

Related papers

Financial Crisis Paper
It is a result of improper policies implemented in the financial system which gives birth to numerous micro and macro economic problems. These reasons have varying severity and have affected the global economies of the world. The recent recession has webbed the entire global economies into its victimization and caused severe distress among both, developed and under-developed countries of the…
Financial Crisis research paper
During the period of late 1990s and the early years of 2000s, a considerable number of developing countries had deposited their savings in the investment and commercial banks of the United States of America. This provided a supplementary liquidity in America. The banks and other financial institutions had more funds than the avenues for the investment. The excessive liquidity convinced many…
The Financial Crisis
Although greatly linked to the sub-prime mortgage crisis, the causes of the 2008 recession are complex and multi-varied. This essay discusses the role of government policy, the role of mortgage originators, securitization, and moral hazards. Additionally, it presents an explanation of how the following work as well as what role they played in the crisis: subprime mortgages, mortgage backed…
The Financial Crisis Essay
The valuable lessons learned from the crisis will also be discussed herein. Bear Stearns, AIG, Lehmann Brothers, Northern Rock, and Goldman Sachs are some elite names that suffered most because of the economic crisis also known as recession. Lehmann Brothers filed for bankruptcy while AIG and a few other elites just hung in there with the skin of their teeth. This economic crisis is still having…
Financial crisis regulatory
Robert Shiller examined the controversy of the global economic crisis and its management and raised prudent arguments about the practice. The economist argues that democratization of finance provides an ideal strategy of managing the contemporary and future economic crisis. Some analysts support Shiller’s perspective while others have criticized his ideology. Interestingly, few economists argue…
2007 financial crisis
The risks kept building up and through the synergistic effect; they interconnected among the institutions, which in the end undermined the stability of the financial institutions. There were seven main causes that worked together to cause the 2007 financial crisis. Such included the securitization of the mortgages bringing forth to the rise in the shadow banking sector, regulatory arbitrage and…
THE CURRENT FINANCIAL CRISIS
The main aim is to prove that recent mortgage subprime crisis significantly reduced the ability of financial institutions to extend consumer credit, reducing their standard of living. Subprime mortgage crisis The recent subprime mortgage crisis was as a result of lending to people who were not qualified for such loans. Behind such crisis financial instruments and institutions are often the key…