Global Financial Crisis

Global Financial Crisis 0
Corporate Financial Management
1/22/2019

Global Financial Crisis 1
Contents
Introduction......................................................................................................................................2
Global Financial Crisis (GFC).........................................................................................................3
Possible Causes................................................................................................................................3
Banks created too much money...................................................................................................3
Push Up House Prices and Speculate On Financial Markets......................................................4
Market instability.........................................................................................................................6
GFC would be repeated again..........................................................................................................6
Impact of GFC on different countries’ economies..........................................................................7
Actual or proposed reforms.............................................................................................................8
Conclusion.....................................................................................................................................10
References......................................................................................................................................11

Global Financial Crisis 2
Introduction
The aim of the report is to explore the understanding of the Global Financial crises which are
considered as one of the most important economic catastrophes since the time of the Great
Depression of the year 1929. This paper majorly includes the discussion on the possible causes
that would have led to the issue of the financial crises which is supported further with the help of
the examples. Moreover, it discusses the opinion that shows that GFC can be repeated again in
the near future or not as this future occurrence can be any form. Further, the report includes the
scale and impact of the global financial crisis of the GFC on the different countries’ economies
which might lead to an impact on the other economies. This impact on the country includes the
discussion related to the home country on which GFC has left an imprint. In the end, it includes
the discussion with the identification of the actual and proposed reforms which might have
occurred during and after the event of the global financial crisis.

Global Financial Crisis 3
Global Financial Crisis (GFC)
Global financial crisis (GFC) is referred as the period in which the countries across the world
faced the situation of the financial stress in the market of the financial and banking system. GFC
or the global economic crises mainly believed to arise at the time of mid-2007 with a credit
crunch. The credit crunch was event in which there was the damage of the self-assurance by the
US depositors in the sub-prime mortgages that leads to the fluidity crises (Davies, 2017). Thus,
this event results in US Federal Reserve adding a large quantity of investment into monetary
markets. This has been found in the research that crises had get worse as stock markets across the
world gone down and this made it extremely unpredictable in year 2008. This has been found
that customer self-confidence has hit a tower of strength as numerous investors have constricted
their belts because of the terror that an increase in the near future. In the year 2008, the world
economy dealt with one of the most hazardous disaster since the year 1930s Great Depression
(Reserve Bank of Australia, 2018).
Possible Causes
This section of the report includes the possible causes which became the reason behind the
Global Financial crises in the market. Some of the causes behind the Global financial crises are
discussed below: -
Banks created too much money
The global financial crises increased when banks created too much money in the market as every
single period a bank creates a loan and then new currency was created (Bénétrix, Lane and
Shambaugh, 2015). This has been found that in the run-up to the monetary crisis, the banks