Global Financial Crisis and Its Impact on India - 4465 Words

GLOBAL FINANCIAL CRISIS AND ITS IMPACT ON INDIA Abstract: The effects of the global financial crisis have been more severe than initially forecast. By virtue of globalization, the moment of financial crisis hit the real economy and became a global economic crisis; it was rapidly transmitted to many developing countries. India too is weathering the negative impact of the crisis. There is, however, an important difference between the crisis in the advanced countries and the developments in India. While in the advanced countries the contagion traversed from the financial to the real sector, in India the slowdown in the real sector is affecting the financial sector, which in turn, has a second-order impact on the real sector. The†¦show more content†¦What is meant by Financial Crises? A situation in which the supply of money is outpaced by the demand for money. This means that liquidity is quickly evaporated because available money is withdrawn from banks, forcing banks either to sell other investments to make up for the shortfall or to collapse. The term financial crisis is applied broadly to a variety of situations in which some financial institutions or assets suddenly lose a large part of their value. In the 19th and early 20th centuries, many financial crises were associated with banking panics and many recessions coincided with these panics. Other situations that are often called financial crises include stock market crashes and the bursting of other financial bubbles, currency crises and sovereign defaults. The current financial crisis is the worst of its kind since the great depression of 1930s. The global financial crisis 2007 is not different from the earlier ones, as two mutually negative trends, namely financial system crisis and global economic slowdown, reinforced each other leading to severe economic contraction. The financial system crisis was reflected by unprecedented level of debt, three times the GDP in the US and Europe. This led to additional requirement of capital for banks to cover losses. All developed economies (e.g. theShow MoreRelatedWhy India Recovered Quickly From The 2008 Global Crisis Essay1594 Words   |  7 PagesWhy India recovered quickly from the 2008 global crisis? Vivek Shah MBA AF 629 December 12, 2016 Introduction It’s the most heard term about the global economy in the recent years and it’s the year we have been always hearing about its 2008. We all have been a part of it in some or the other way and all the major economies had been affected by the global turmoil which eventually lead to the worst situation after the Great depression of 1929. The sub-prime crisis in USA which lead to great recessionRead MoreGlobal Crisis1656 Words   |  7 PagesGlobal crisis occurs due to financial crisis and economic crisis. 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