Financial Crises and Economic Regulation

The assignment examines the profound influence of financial crises on economic regulation and various facets of the economy. It delves into the challenges faced by financial institutions during crises, their inability to provide loans, and the ripple effects on unemployment and government policies like monetary and fiscal interventions. The analysis highlights the significant role of financial crises in shaping economic landscapes, drawing specific attention to the Great Depression of 1930.

BUSINESS
SKILLS

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK ..............................................................................................................................................1
1 Financial Crises of 2008 can be avoided by western nations..................................................1
2 Causes of financial crises.........................................................................................................2
CONCLUSION:...............................................................................................................................4
REFRENCES...................................................................................................................................5

INTRODUCTION
Business skills are abilities and competencies which are required for effectively caring
out different types of business activities from the organisation. The financial crises of 2008 were
disaster after great depression act of 1929. The report focuses about the conflicts that have been
avoided by western unions in 2008. Financial crises have great impact on the economy. The
business skills help in improving the economy of the country.(Kornfeld, Sznol and Lee, 2015).
The main cause for the financial crises were fights among the financial regulators, problems with
the availability of credit and the different ideologies of economies.
1 Financial Crises of 2008 can be avoided by the western nations
After the great depression, the world economies faced financial crises. The economy of
the world faces the dangerous crisis. In year 2007 the financial crises hit the global economy.
The financial crisis was the combination of the mortgage assets and the debts. In the economy
the financial has many similar types. In the economy, the financial stress was driven by the
recession. financial stress that was driven by the recession in the economy in the past years. The
financial crises and the recession globally spread through the trade linkages and financial
linkages, there was availability of liquid factors in abundant quantity, strong leverages in
economy, risk premium were low in the economy and the factors those contributed to
development of bubbles in the economy (Fleckenstein and Seeleib-Kaiser, 2011). From the
financial crisis the positions of the economy was overstressed. The investment banks were
purchasing the mortgages from the mortgages issuers, repacking them for the selling purpose.
There was a small change in the corners of the financial systems which was enough to carry out
the whole structure. The financial crises globally arrived in the economy and thus the crises
triggered with the great depression act of 1930.
The great depression was a benchmark trigger in the financial crises of western nations
and thus it served as a great lesson. In the present time, the government and the central banks
were aware about financial crises and the impact of these crises on the economy. The mistakes
needs to be focused and avoided as these were common witnessed in European unions and
elsewhere in the economy. The financial crises have an impact on the economy and due to this
reason, the large banks were running out of finance, the monetary policies in the economy was
removed and flow of money in the economy stopped and thus the government have to implement

financial help to people those who were residing in the economy. Like the great depression act of
1930, the experience was revelled that European countries have restored protection for people at
the large scale. It also reflected the importance of coordination of European countries If there
was any situation creates to bring the improvement.
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The early stages reflected that the crises situation as the shortage of liquidity among
different financial institutions in the economy. The concerns for different financial institutions
were increasing but there was a collapse among financial institutions as the demands for finance
was high in the economy. The perception was changed after defalcation of US investment banks.
The investors those who were collapsed they have finally liquidated their stocks and their
positions from the market and they went into a situation of tailspin. After this incident, there was
a drastic change in UK economy. The economy suffered a downturn since the great depression
act of 1930 (Gorman, 2011).
There was a transformation of the economy into financial distress with the difficulty in
credit supply in the economy and thus it turns tro hutting the business and also turn the
demand. . There was a problem in cross border transmission because they were integrated with
the financial system of the economy and they had the supply chain that was integrated in to the
market.. There was a great fall in the gross domestic products of the economy and this reflected
the sharpest turn in the economy. The demand for finance in economy was constrain as there was
depression in demand and the structure of economy was under adjustments because of financial
crises in the economy.
The financial crises in the economy have greater impact on the economy as there was
slow down in the economy, huge unemployment occurred and impact of fiscal and monetary
policies of the government brought downturn and the economy suffered a huge loss. Gardiner
2012.)
2 Causes of financial crises
The main causes of financial crises are described as:
Market to market accounting: In 1990, the accounting standard board and security exchange
board of India were getting request from the public companies that operated in economy to
values their assets at the market prices as it was in opposition to historical cost. This practise was
seen during the great depression act of 1930. This incident forced the country into insolvency
stage from the accounting points as the credit markets were seized in the economy.
Infighting among financial regulators: There were disorders among the financial
regulators like banks and the securities exchange board as there a great need for finance in the
economy. This incident gave rise to fighting amount for the financial regulators.
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Securities of banks: The banks were successful in retaining the loans they originated.
This gave labours incentives in the economy to underwrite all the loans that they have taken and
which have a small chance of defaulting in the economy(Saunders and Lewis, 2014.) The
original bank did not have any security to loans and thus there were less incentive generated to
monitor quality of standards.
Greed: Every person has the desire to get rich from the viewpoint of economist. Greed is
necessary for economic growth in the economy. But it can also have a negative effect when it is
used at an extreme extent in the economy. The regulators were forced to get higher loans from
the economy. The politicians gain popularity so that the banks could lend money.
Fraud: There were very few franchisers in the economy who had their roles in the
financial crises. They also committed fraud when the crisis was prevailing in the economy (Core
business skills, 2016). From the incident it is revealed that there was the ups and downs in the
economy. So that there could be mortgage of the securities to the institutional investors and to
the insurance company.
Short term investment: In the situation of economic crises, the short term investors
mortgage the sub prime securities and derivatives in the economy. The short investors also
suffered a drawback as there were financial crises in the economy.
Politics: The bankers and the politician in the economy have formed an alliance which
was conducted with the mutual approvals of bank mergers. The politicians in the economy have
blackmailed banks to provide the loans to borrowers in the economy. The banks and the
institutional investors took risk and thus the politicians were successful in their dreams of
providing home-ownership to the Americans.(Wilton, 2011)
Bad economic assumptions: The crises never declined the home prices in the economy
on a nationwide basis. The financial investors mortgage the risk which was evolved in the
economic situations and that affected the organisations.
High oil prices: The oil producing company charged high prices for oil after the financial
crises in the economy. They exerted pressure on financial institutions and banks to put the money
back to in the financial ways like for instance the sub prime mortgage in the economy.
Break down in international monetary system: The financial crises caused trade
imbalance in the economy between different developing and the developed countries. The
values of currencies in these countries were depressed. To put the money into use that was
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borrowed at the time of financial crises it has no or little choice to underwrite the standards and
to grow the pool of potential buyers.(Rue, Byars and Ibrahim 2012)
Monetary policy: The monetary policy in the economy was greatly affected and it had to
provide loans at the lower rates to have the housing bubble in the economy.
Shadow banking: Thousands of banks in the economy failed to provide loans and
finance during the time of financial crises and thus they shared the responsibilities for failure.
The shadow banks did not fall under the category of primary regulatory of providing loans and
securities at the time of financial crises.
CONCLUSION:
The financial crises in the economy have a great impact on regulation of the money in the
economy. There were many ups and down in the economy. Further, the economy suffered great
loan and the financial institutions were also not successful in helping people by providing them
loans to people and other institutions at the time of crises. The economy crises highly affected
the great depression of 1930. The crises had an impact on economy and there were problem of
unemployment in the economy and the monetary and the fiscal policies of the economy were
also affected.
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REFRENCES
Books and Journal
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economy of employment-oriented family policy in Britain and Germany. Journal of
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Gorman, M.F., 2011. A case study in effectively bridging the business skills gap for the
Information Technology professional. Journal of Education for Business. 86(1), pp.17-
24.
Gardiner, B., 2012. Business skills and Buddhist mindfulness. The Wall Street Journal, 3.
Saunders, M.N. and Lewis, P., 2014. Doing research in business and management: An essential
guide to planning your project. Pearson Higher Ed.
Wilton, N., 2011. Do employability skills really matter in the UK graduate labour market? The
case of business and management graduates. Work, employment and society. 25(1).
pp.85-100.
Rue, L., Byars, L and Ibrahim, N., 2012. Management: Skills & Application. McGraw-Hill
Higher Education.
Wilton, N., 2012. The impact of work placements on skills development and career outcomes for
business and management graduates. Studies in Higher Education. 37(5). pp.603-620.
Treasury, H.M., 2011. Department for Business Innovation and Skills. The plan for growth.
Crown Copyright.
Kornfeld, J., Sznol, J and Lee, D., 2015. Characterizing the business skills of the public health
workforce: practical implications from the Public Health Workforce Interests and Needs
Survey (PH WINS).Journal of Public Health Management and Practice. 21. pp.S159-
S167.
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Core business skills, 2016. [Online]. Availble thorugh:
<http://www.smarta.com/advice/business-mentoring-and-skills/skills-and-training/core-
business-skills-you-should-have//>. [Acceses on: 18th May, 2017].
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