Financial Crisis Between 2007 And 2009 Essay - 1331 Words

Financial Crisis between 2007 and 2009 was the worst economic crisis after the Great Depression in 1930s. This crisis was a worldwide crisis as it affected the financial system globally and led to collapse in economy. Financial intermediation is a process of banks that take funds from the depositor and lend them out to the borrower. In the financial transaction, financial intermediary acts as the middleman between two parties. Commercial bank, investment banks, pension funds are the example for financial intermediation. This kind of financial intermediary usually provide mortgage to the lender. Housing prices in the United States rose steadily after the World War II. Although some research indicated that the financial crisis started in the US housing market, the main cause of the financial crisis between 2007 and 2009 was actually the combination of housing bubble and credit boom. The banks created so much loan that pushed the housing price to the peak. As the bank lend out a huge am ount of money, the level of individual debt also rose along with the housing price. Since the debt rose faster than people’s income, people were unable to repay their loan and bank found themselves were in danger. As this showed a signal for people, people withdrew money from the banks they considered as â€Å"safe† before, and increased the â€Å"haircuts† on repos and difficulties experienced by commercial paper issuers. This caused the short term funding market in the shadow banking system appeared aShow MoreRelatedImpact of Financial Crisis on Gulf Area Essay1732 Words   |  7 PagesThe global financial crisis that was experienced in 2007/2008 affected many nations of the world. Some countries such as America and most European countries were hard hit since they were directly affected by the crisis. Other countries especially those in Asia and Africa were not adversely affected as they were not directly hit by the crisis. This crisis started in the United S tates after the housing bubble busted. Although the bursting of the housing bubble was the main cause of the crisis, there wereRead MoreThe Global Financial Crisis Of 2007-20081123 Words   |  5 PagesThe 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, andRead MoreIntroduction Of The Bank Of England986 Words   |  4 Pagesin issuing notes. This concept leads to general idea of this paper, which will look at the evolution of output, inflation, the official bank rate set by the Bank of England and government spending in the UK ( Greer, 2009). It is fascinating for one to track on how the global financial integration has been evolving for the past century. Understanding the evolution of output is possible by looking at the measured stocks of the external assets and liabilities; together with the cumulative consequencesRead MoreVietnam And Its Effects On The United States1101 Words   |  5 Pagesopenness and (ii) Before the crisis, Vietnam was ranked the 50th and 41st among the top 50 countries with highest exports and imports relatively, accounting for 0.3% of total global exports and 0.4% of total global imports. Two majors news affecting Vietnamese exports in the seven-years period between 2001 and 2007 are the opening of the US market starting in 2001 and the joining of Vietnam into WTO in 2007. During this period, lasting until before the financial crisis, Vietnamese exports had beenRead MoreGovernment Intervention And Laissez Faire Of Market Mechanisms1369 Words   |  6 Pagesby the plethora of explanations concerning it, the 2007-08 financial crisis that originated in the United-States is highly complex. The literature presents various causes, most of which can be placed on either side of a debate between government intervention and laissez-faire of market mechanisms. On one side, it is argued that financial actors are responsible for the crisis as a result of their use and distribution of complex and risky financial products, and their irresponsible lending. On the otherRead MoreThe Effect of Recent Financial Crisis and Regulatory Implications in Asia1532 Words   |  7 PagesNow on the larger scale is the impact on the institutional level of the global financial crisis. The financial crisis began in United States in 2007 and spread to other countries. The crisis was triggered by a liquidity shortfall in United States banking system and resulted to the collapse of financial institutions. Asia is one major continent in which the recent financial crisis had spread. The impact of the crisis had far reaching effects on the economy of Asia than many people had anticipatedRead MoreThe Financial Crisis : Deregulation Or Over Regulation?1175 Words   |  5 PagesThe Financial Crisis: Deregulation or Over-regulation? As evidenced by the plethora of explanations concerning it, the 2007-08 financial crisis that originated in the United-States is highly complex. The literature presents various causes, most of which can be placed on either side of a debate between government intervention and laissez-faire of market mechanisms. On one side, it is argued that financial actors are responsible for the crisis as a result of their use and distribution of complexRead More2008 Us Economic Recession1709 Words   |  7 PagesINTRODUCTIONS The  Global Financial Crisis  of 2008 is considered by many economists to be the worst  financial crisis  since the  Great Depression  of the 1930s. It resulted in the threat of total collapse of large financial institutions, the  bailout  of small and big banks by national governments, and downturns in stock markets around the world. In United States, the housing market also suffered, resulting in  evictions,  foreclosures  and prolonged unemployment. The crisis played a significant role inRead MoreTheu.s. Housing Market And The U.s. Financial Crisis1448 Words   |  6 PagesS. housing market between 2007 and 2009, led to the biggest global financial crisis. The impact of this crisis extended over the world, and the economies of many countries were damaged. Kawai stated that: ‘The ongoing global crisis has had a profound impact on the Asia and Pacific region, particularly on its exports.’ (2009:1) There were a lot of factors which brought about the crisis. Due to limited space, this essay will look at the U.S. housing market and the U.S. financial system, and discussRead MoreHow Government Economic Policies Caused the Financial Crisis of 20081553 Words   |  7 PagesThe financial crisis in 2008 that led to a crisis in the banking sector, and which nearly led to a complete collapse of the economy globally, was not only caused by changes in the regulatory, regulation and legislation oversight, but also fiscal and monetary policies. Many believe that, expansion of excesses monetary and irresponsibility of some of the government agencies led to the crisis. According to reports by Taylor (2009), excesses monetary policies were the main cause of the 2008 financial