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Report on Causes and Impact of Global Financial Crisis

   

Added on  2020-06-05

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Global Financial Crisis
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Table of ContentsINTRODUCTION...........................................................................................................................1TASK...............................................................................................................................................11. Global financial crisis and their possible causes.....................................................................12. Impact of GFC on different countries....................................................................................23. Measures taken by IMF to overcome from Global financial crises........................................5CONCLUSION................................................................................................................................5REFERENCES................................................................................................................................7.........................................................................................................................................................7
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INTRODUCTIONGlobal financial crisis began in July 2007 and considered as the greatest financial crisis after thedepression in 1930. GFC started with the collapse of mortgage market of US in 2007 and afterthat, with the mishap of Lehman brothers on September 15, 2008, it leads to banking crisis in allover the world. The reason behind collapse of Lehman brothers is excessive risk taking and lossof US investors on subprime mortgages.In the present report, possible causes for GFC, impact of GFC on different economic andreforms which are taken to overcome from financial crisis will be discussed.TASK1. Global financial crisis and their possible causesThe main reason behind Global financial crisis is loss of confidence of investors on highrisk mortgages of US. This will cause liquidity crisis in market in July 2007. This will beconsidered as the worst financial crisis after the depression of 1930. As this result, large numberof capital is invested by US government in financial market. This crisis becomes the more worstafter the collapse of Lehman brothers on September 15, 2008. Main reason behind the mishap ofLehman brothers is excessive risk taking by them. This will lead to the baking crisis which haveimpact on economies of all over world. The possible reason behind crisis in banking sectors is that the house owners which aretaking high risk loans are unable to to pay out their loan amounts. This will have a large impacton the housing market of US. This will result in the lowers down the values of houses andborrowers found themselves as carrying the negative equity. It will create the situation wherelarge number of borrowers are unable to pay their loan amount and bank faced situation wherevalue of house and land is worthless in today's market. The banks of US faced liquidity crisis ontheir hands. This will be named as credit crunch. Possible causes for Global financial crisisThere are many reasons and causes which contribute in arising of Global Financial Crisisin 2007 and collapse of the Lehman brothers in 2008. These different causes are defined asbelow:1
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