Financial Crisis

The definition of a financial crisis is applied broadly to various situations in which some loan companies or assets suddenly lose a large part with their value. From the 19th and early 20th centuries, many financial crises were related to banking panics, and lots of recessions coincided with your panics. Other situations that are usually called financial crises include stock trading game crashes and the bursting of other financial bubbles, currency crises, and sovereign defaults. Financial crises directly produce a loss of paper wealth they don’t directly bring about alterations in the true economy unless an economic downturn or depression follows.

Many economists have offered theories about how financial crises develop and how they could be prevented. There is very little consensus, however, and financial crises remain a consistent occurrence around the world.