Submitted to :

Farzana Akter
Lecturer
Dept. of business administration
East west university
Submitted by:
Md. Shafayat Uah !huiya
"d # $%&%'$'&%'&(&
A report on
Global financial crisis -2008 and onward
(reasons and consequences)
)ourse* Fin +,%
Sec* $
A report on
Global financial crisis -2008 and onward
(reasons and consequences)
)ourse* Fin +,%
Sec* $
Date of submission* September $+
rd
- $%&+
Global financial crisis -2008 and onward:
"n $%%,- the United States of America e.perienced a hu/e financia crisis which ed to
the most serious recession since the Second 0ord 0ar. !oth the financia crisis and the
downturn in the U.S. economy spread to many forei/n nations- resutin/ in a /oba
economic crisis. 1he /oba financia crisis took its pace actuay from the mid of $%%2 to
$%%,. 1o be specific From au/ust $%%2 to September $%%,. 1he US Federa 3eserve
!ank formed a pan in order to rescue their rea estate industry. 1here was fairy wide
a/reement that poor peope wi /et a benefit of mort/a/e. 1heir findin/ was that after the
coapse of the tech bubbe in $%%% and the 45&& terrorist attacks in $%%& was to cut
interest rates to the very ow eve of one percent. 1his was at a time when housin/ prices
were sti /rowin/ 6uite stron/y at a rate above one percent. So they have infuenced
commercia banks to act more positivey in this sector. Accordin/ to this e.panation
what had happened was that the way the mort/a/e industry worked had chan/ed
si/nificanty over the years. At that time a bi/ bubbe which afterword known as rea
estate bubbe of US /rew. 1he most important reason that the bubbe was so bi/ in the
U.S. was the poicies of the Federa 3eserve back in $%%+. !ecause of those poicies
many financia institution invested in the sector but they for/ot to overook the rue that if
the borrower fais to pay the institution have to make the payment by itsef. After some
day when the price of the houses went up because of more and more demand the
borrower coudn7t make the payments to the banks and they /ot bankrupt. And as a resut
eventuay the banks started to suffer the situation. 1hin/s /ot even more compicated
since September &(- $%%, when Lehman !rothers- one of the ar/est investment banks in
the word- faied. 8ver the ne.t few months- the US stock market pummeted- i6uidity
dried up- successfu companies aid off empoyees by the thousands- and for the first time
there was no on/er any doubt a recession was upon the American peope. 1hey have
faced financia crisis for which they needed more oan abe fund which they tried to /et
throu/h securitization moreover !anks borrowed even more money to end out to create
more securitization but this didn7t work out for them rather it made them more iabe. 1he
probem was so ar/e- banks even with ar/e capita reserves ran out- so they had to turn
to /overnments for bai out. 9ew capita was in:ected into banks to- in effect- allow them
to ose more money without /oin/ bust. 1hat sti wasn7t enou/h and confidence was not
restored. 1his situation infuenced financia market. !anks virtuay
stopped endin/ to each other. 1he risk premium on interbank borrowin/ rose sharpy to
( per cent- whereas typicay it was cose to zero. pro:ects were sheved- the corporate
sector virtuay topped borrowin/- trade credit was hard to /et and- with fain/ demand-
particuary for investment /oods and manufacturin/ durabes ike cars- trade voumes
coapsed. !y these the rea estate bubbe /ot burst and as US security market is
interinked with many more stock market- those aso faced a coapse. Markets ike
London Stock E.chan/e - 1okyo Stock E.chan/e - Shan/hai Stock E.chan/e - Shenzhen
;oba financia crisis of $%%, < onward
Stock E.chan/e - Eurone.t etc. faced the coapse aone with US coapse. Eventuay the
words /iant country7s economy went under the knife. A financia crisis had made its
mark in the word7s economy- Socia services- maintenance and many more /ovt. pro:ects
/ot stuck because of unavaiabiity of fund. So- ceary the points which infuenced the
crisis were
o Lower interest rate tendency
o 3ea estate bubbe burst
o =articipation of unawfu practice of /rantin/ oans by US financia institutions
o "mproper monitorin/ of Federa reserve bank
o "ncreasin/ infation and price
o Stock markets interink
o US economy7s infuence on rest of the other economies
0hen the share market of US faced the recession because of their sef created situation
they reduced investin/ on other countries share and oca markets investments. As it is
known that the most of the stron/ and financiay sound company7s are from united states
-a reduction on their investments made the whoe word suffer. "t is aso tod that after the
recession of &4+% this $%%, recession took the hi/hest amount of cost for the whoe
word. 0hich took amost + and haf year for the word to overcome the certain situation.
Even now some of the countries ike ;reece- "tay and many more around the word.>
;reek /overnment?s efforts to se state'owned assets is sidetracked a/ain when Steios
Stavridis- chairman of the privatization a/ency- is forced to resi/n after takin/ a vacation
ride on private :et of ;reek oi tycoon@ /overnment insists ar/e se'offs are sti on
track> this news of new Aork times of $%
th
au/ast $%&+ shows how deep the crisis is even
after ( year of the actua incident of US. From this e.perience Some have 6uestioned
why the US ;overnment has been ess /enerous with baiout funds for the housin/ and
automobie industries than it was with 0a Street. 1he answer is the cru. of what made
this a crisis. "n a critica sense- financia business is more important than other industries-
because finance is necessary for every business to operate successfuy. Lack of access to
credit woud cause even profitabe businesses to cose down. 1hus- without a successfu
financia baiout- a industries woud suffer catastrophicay and simutaneousy.
;oba financia crisis of $%%, < onward
References :
0ikipedia
1he 9ew Aork 1imes
1he Mebourne "nstitute of Finance
0ord bank
0ikinvest.com
businessdictionary.com
;oba financia crisis of $%%, < onward