Origin and Impact of Global Economic Crisis

Financial Management

International Conference on "Innovative Management Practices"

The global economic crisis originated in the United States in the year 2007 as sub-prime mortgage crisis. As a result, the country plunged into recession in the year 2008. Then it quickly spread to United Kingdom, Japan, other developed countries and then to the developing countries. The major factor is the large imbalance in the current account of some of the largest economies in the world. Many Asian countries and Oil producing countries invested the surplus money in the financial markets of United States. Another critical factor is the inadequate regulation of the players in the financial market by the government agencies in the United States and the United Kingdom which followed the persistent trend towards deregulation. Failure on the part of the market players such as banks, insurance companies and credit rating agencies in performing their intended functions was the other core factor. The new financial products were innovative and it was next to impossible for the investors to assess their real worth. As the economic crisis has spread to the whole world, slump in demand, severely curtailed production, acute unemployment and the resultant loss of income have been experienced by people all over the world.

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