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Causes of a financial crisis
Generally, a crisis is caused if institutions or assets are overvalued, and can be worsened by panic and herd-like investor behaviour.
Contributing factors include systemic failures, unexpected or uncontrollable human behaviour, regulatory absence or failures, or contagions that is like a virus that spread from one institution or country to the next. If left unchecked, an economic crisis can cause a recession or depression.
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A financial crisis is often associated with a panic or a bank run where investors sell off assets or withdraw money from savings accounts.
- Asset prices drop in value.
- Consumers are unable to pay their debts.
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Contagion, in financial terms, refers to the diffusion of economic booms, and can occur both domestically and globally. It is basically a spread of an economic crisis from one region to another, and spreads on an international level due to the global market interdependence.
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- In history, Black Friday was a stock market disaster that happened on September 24, 1869, when, after a period of uncontrolled speculation, the price of gold crashed, and the markets crashed.
- The contemporary meaning refers to the day after the U.S. Thanksg...
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It is defined as a perceived seasonal increase in stock prices during January.
Analysts generally attribute this rally (a period of sustained increases in the prices of stocks, bonds, or related indexes) to two factors.
- A price drop happens in December - when ...
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