Financial_Crisis——ppt.pptVIP

Financial Crisis By members What is financial crisis? A financial crisis is a disruption to financial markets in which adverse selection and moral hazard problems become much worse, so that financial markets are unable to efficiently channel funds to those who have the most productive investment opportunities. As a result, a financial crisis can drive the economy away from an equilibrium with high output in which financial markets perform well to one in which output declines sharply. The causes of financial crisis Americans’ overconsumption American Economic excessive virtualization American Economic excessive liberalization Asian emerging markets Subprime mortgage crisis What is America’s fault? The U.S. is currently engulfed in the most severe financial crisis since the Great Depression. A key structural factor behind this crisis is the large demand for riskless assets from the rest of the world. Such demand not only triggered a sharp rise in the U.S. asset price, but also exposed the U.S. financial sector to a downturn by concentrating risk onto its balance sheet. While in emerging markets the concern with capital flows is in their speculative nature, in the U.S. the risk in capital inflows derives from the opposite concern: capital flows into the U.S. are mostly non-speculative and in search of safety. As a result, the U.S. sells riskless assets to foreigners, and in so doing, it raises the effective leverage of its financial institutions. The effects of financial crisis Many financial institutions went broke or reconbined Global income redistribution is appearing The development of financial liberation has been inhibited International currency system is forced to be changed Large financial crisis in history 1788 in Britain(1st industry revolution) 1890 in Germany 1899 in Russia 1900 in Japan 1929-1933 in the whole world 1957-1958 in the whole world In 1973,the most unprecedented in the whole world 1982-1983 in Vietnam 2000 in America 2008 in the whole