The Global Financial Crisis or The
Great Recession created a very bad and negative impact and control on Banks,
Financial and Non-Financial Institutions, Families, Businesses
and the overall Global Economy. This global
financial crisis caused and resulted the slowdown in economic activities, rise
in unemployment, decrease in business profits, and increase in budget deficit.
Sectors and Stock Market:
Due to the financial crisis of
2008, stock market declines, economies of all over the world were also declined
and slowed down due to the limited credits. Banks also stopped lending the money
and obtaining money for people also became difficult for banks. Many banking
sectors faced huge losses and even many of these provoked bankruptcy like
Banks also lost a very large amount
of capital and public lost their faith in the banking system as well which was
lead to the shortage of funds in the economy because public deposits were the
major source of funds for the banks. Non-financial banks were also affected due
to the global financial crisis such as pension funds, insurance companies, and
finance companies as well. Several banks and financial institutions were also
acquired by other institutions or merged themselves.
This graph shows the declining
factor of ‘Profits’ in banking sectors:
Rate and Consumer Spending:
Unemployment rate was also
increased rapidly and due to this public also started to protest as a result of
inflation. Consumers consumption were decreased as their confidence and faith
were fell down. Only disposable income were left in the hand of consumers
through which they only fulfilled and satisfied their needs.
As the consumers stopped consuming their consumptions on
consumer’s product, the demand of all goods and services were also declined due
to the increase in uncertainty, which is also the result of no value of
produced goods and services.
This graph illustrates the increase in ‘Unemployment Rate’
during the financial crisis:
More developed countries, less
developed countries and developing countries all experienced and faced the
decrease in GDP and increase in budget deficit. The whole world also faced the
higher risk which was intended to the higher interest rates through which
institutions were bound to borrow funds for the purchase of assets.
This graph is elaborating the
overall ‘GDP’ of the world which was decreased in the recession: