Hi Vangelis,Certain debates have confronted to find out the reasons behind the global financialcrisis of 2007 that started initially in USA and afterwards, it went on to hit the globaleconomy as well. According to Ferri and Leogrande (2015), the shift from stakeholder toshareholder has been the primary reason behind the crisis. The stability in the financialsystem was imbalanced due to modification into greater systemic risk because of the shiftfrom STV-OTH to SHV-OTD. I think that this might be a secondary reason behind the crisis;however, there is much more to the entire story. In the words of Balakrishnan, Watts and Zuo (2016), the primary reason behind thecrisis is due to the international savings gluts repressing long-term rates of interest andincreasing asset prices. Along with this, another cause is national macroeconomic imbalance.Even though a small variation could be observed, both need the reform of global financialstructure for resolving the issue.Thus, the significant reason is the long-term imbalance leading to the crisis. In themean time, USA supported the neo-liberal economic policy leading to the creation of virtualeconomy (Vazquez and Federico 2015). Moreover, USD controlled the internationalmonetary system and its influence was extended into the world economy. The virtualeconomy includes insurance, financial services, leasing services and real estate sectors.Between 2007 and 2009, there was heavy decline in the GDP of USA resulting in increase inthe virtual economy and fragility in the financial services sector. Based on this viewpoint, theshift from STV-OTH to SHV-OTD is not the major reason behind the global financial crisis. Regards,Khaled

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Reasons Behind Global Financial Crisis of 2007

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