Global Financial Crisis and its Possible Causes

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Contents
Introduction................................................................................................................................2
Financial Crisis...........................................................................................................................2
GFC causes.................................................................................................................................3
GFC will be repeated.................................................................................................................5
Impact on the countries..............................................................................................................6
Actual and Proposed Reforms....................................................................................................7
Conclusion..................................................................................................................................9
References................................................................................................................................10

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Introduction
The aim of the report is to understand the aspects related to the Global financial crisis and the
possible causes which contributed enough to the occurrence of the financial crises. Global
Financial Crisis refers to the period of stress in the global financial market and banking
systems which took place across the world. This report includes the discussion of the causes
of the changes due to which the GFC repeat in the near future. Moreover, the paper will also
include GFC on the countries and their economies at the time of 2007-2008 crisis. The
discussion is not limited to the Great Depression of 1929 but it also includes the Financial
Crisis of 2007-08 which led to the rise in the different reforms. Further, it includes the
discussion related to the different reforms which were formed by the government after the
occurrence of the Global financial crisis for eliminating any such situations in the near future.
Financial Crisis
There are many events of the financial crisis in the past 40 years which is remarked as the
difficult period for the countries. The Great Depression of 1929-39 and Financial Crisis of
2007-08 are the examples of financial crisis events which majorly focused while talking
about GFC in the report.
The Great Depression of 1929-39
Great Depression of 1929-39 is considered as the worst financial and economic year for the
countries in the 20th century. It was found that numerous people believe that the Great
Depression was caused by Wall Street crash of 1929 but actual reason was behind the event
was the poor policy of U.S. This period was continuously going till10 years which results in
massive loss of income, increasing unemployment rates, and the industries faced the output

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loss. It has been observed that the unemployment rate of the US is almost 25% at the peak of
the crisis in 1933.
The Financial Crisis of 2007-08
Financial Crisis of 2007-08 is still considered as one of the most severe crises after the Great
depression of 1929-39. This financial crisis led to the wreaked financial markets across the
world. It has been found that Lehman Brothers are one of the major contributors behind the
issue as they are considered as one of the leading investment banks in the world. The
investment bank is the biggest bank which is evident when it acquired financial institutions
and businesses. It takes almost a decade in order to return the things to normal by wiping the
millions of jobs and billions of dollars of income along the way (Kler, Leeves, and Shankar,
2015).
GFC causes
It has been analysed that there are many causes of the financial crisis which needs to stop in
order to remove the financial crisis from the world. Some of the possible causes are discussed
below:
Banks created too much money
It has been seen that banks provide the loan to people which leads to the generation of money
by them. It was found that banks loans generated money doubled by 2007 which was possible
by issuing new money on the market. This money leads to the rise in the debt within the
economy, which customers and investors were not able to pay. The increasing debt was one
of the reasons which cause the period of great depression and financial crisis in the economy
(Bénétrix, Lane, and Shambaugh, 2015).