The paper "Financial Institutions and Markets" is a great example of an assignment on finance and accounting. The global financial crisis is considered the most pervasive economic obscurity which as negatively suppresses the economy of the country’ s financial markets and the real economy. The global financial crisis has great depressions and difficulties in the country’ s economy since it has affected tremendously most of the key economic fields thus overwhelming economical performances and conditions (Graham K. and Wilson Grant, 2012). The global financial crisis majorly deems the financial worthiness of financial institutions such as banks thus degrading the economical contributions.
The major factors that crash down the financial crisis are a result of a combination of complex factors such as easy credit conditions which enhances higher changes of lending risk, skeptics of capitalism Real estate bubble, international trade imbalances, and financial policy preference related to both government expenses and revenues. Causes of the global financial crisisEasy credit conditionsU. S. Financial Crisis Inquiry Commission January 2011 reported that the global financial crisis is majorly caused by the extensive failures in financial regulations. Unscrupulous Federal Reserve’ s lending failures lead to vivid breakdowns in corporate governance due to irresponsible financial considerations that have stanch the surge of toxic borrowings of the financial system (Chan-Lau, 2010).
American international group financial product reports a collateral debt obligation and issuing large numbers of mortgages at a low price turns hammer the CDO system. Financial institutions such as banks were given the authority to develop their own model in regulating their capital approximation for risk. Thus the model was standardized to a short period of time without accommodating future financial uncertainties, such as default in repayment which might cause insecurity in their operation. The graph depicts an increasing trend in lending from 2000 towards 2006 and a consequent decline in lending in the following year.
This is a result of poor credit measures that consequently lead to default in payment thus subjecting the firms to the financial crisis. The deliberate measures to safeguard the financial institutions against mortgage lending incentives should be to enhanced secure the lending financial crisis.
Allen F. and E. Carletti, 2008. “Should Financial Institutions Mark to Market?”. Bank of France Financial Stability Review , 12, pp.-6.
Chan-Lau, J.A., 2010. The Global Financial Crisis and its Impact on the Chilean Banking System. I.M.F press.
Fabrizio, S., 2010. Coping with the Global Financial Crisis: Challenges Facing Banking Sector. In IMF Publication. Cengage Learning. pp.3-10.
Graham K. and Wilson Grant, 2012. The Consequences of the Global Financial Crisis. In The Rhetoric of Reform and regulation. United Kingdom: Oxford university Press. p.8.
Jonathan A.Et Al, 2011. The Impact of the Global Financial Crisis on Emerging Financial l Markets. Newyork: Emerald Group Puplishing Limited. p.265.
Senhadji S Et Al, M.Y.K.A., 2010. Impact of the Global Financial Crisis on the Gulf Cooperation Council Countries. United States of America: International Monetary Fund Publishers.
Wachter, H.R.a.S., 2006. “Bubbles in Real Estate Markets,” AssetPrice Bubbles: The Implications for Monetary, Regulatory, and International Policies. Cambridge MIT Press.
World Bank Staff, 2011. World Bank Group's Response to the Global Economic Crisis. World Bank Publication. p.72.