Financial crisis

Financial crisis,

Definition of Financial crisis:

  1. A situation in which the supply of money is outpaced by the demand for money. This means that liquidity is quickly evaporated because available money is withdrawn from banks, forcing banks either to sell other investments to make up for the shortfall or to collapse. See also recession.

  2. A financial crisis may have multiple causes. Generally, a crisis can occur if institutions or assets are overvalued, and can be exacerbated by irrational or herd-like investor behavior. For example, a rapid string of selloffs can result in lower asset prices, prompting individuals to dump assets or make huge savings withdrawals when a bank failure is rumored.

  3. In a financial crisis, asset prices see a steep decline in value, businesses and consumers are unable to pay their debts, and financial institutions experience liquidity shortages. A financial crisis is often associated with a panic or a bank run during which investors sell off assets or withdraw money from savings accounts because they fear that the value of those assets will drop if they remain in a financial institution. Other situations that may be labeled a financial crisis include the bursting of a speculative financial bubble, a stock market crash, a sovereign default, or a currency crisis. A financial crisis may be limited to banks or spread throughout a single economy, the economy of a region, or economies worldwide.

How to use Financial crisis in a sentence?

  1. The financial crisis experienced by the generation of businesses will never be forgotten so we are learning from our past.
  2. A financial crisis may be limited to a single country or one segment of financial services, but is more likely to spread regionally or globally.
  3. If your business is ever in a financial crisis you may need to call on some favors and hope you can get the help you need.
  4. My family was experiencing a financial crisis and called upon me, the college graduate, to help them out of it.
  5. Banking panics were at the genesis of a number of financial crises of the 19th, 20th, and 21st centuries, many of which led to recessions or depressions.
  6. Stock market crashes, credit crunches, the bursting of financial bubbles, sovereign defaults, and currency crises are all examples of financial crises.

Meaning of Financial crisis & Financial crisis Definition

Financial Crisis,

What is The Meaning of Financial Crisis?

  1. During the financial crisis, asset prices fall, companies and consumers are unable to repay their debts, and financial institutions face liquidity constraints. Financial crises are often associated with panic or banking, in which investors sell assets or withdraw money from savings accounts for fear that the value of these assets will fall if they remain in financial institutions. Other conditions that can be shaped into an economic crisis are the bursting of a speculative financial bubble, a stock market crash, national bankruptcy or an exchange rate crisis. The financial crisis may be confined to the banks or it may extend to an economy, a region's economy or a world economy.

    • Crowding in banks was at the root of a series of financial crises in the 19th, 20th and 21st centuries, most of which led to a recession or depression.
    • Declining stock markets, debt crises, financial bubbles bursting, government defaults and financial crises are examples of economic crises.
    • Financial crises may be limited to one country or class of economic services, but they are more likely to spread regionally or globally.

Literal Meanings of Financial Crisis


Meanings of Financial:
  1. From a financial point of view.

  2. The financial or financial situation of an organization or individual.

Sentences of Financial
  1. Independent financial advisor

  2. You need to focus on your finances, especially your cash flow

Synonyms of Financial

business, money, budgetary, commercial, banking, investment, economic, fiscal, pecuniary, accounting, monetary


Meanings of Crisis:
  1. When faced with a serious problem, difficulty or danger.

Sentences of Crisis
  1. The current economic crisis

Synonyms of Crisis

cataclysm, catastrophe, emergency, disaster, calamity

Examples of Real-World Financial Crisis:

The Great Depression of 1929:

It is considered as one of the worst financial crisis of the 20th century. The impacts of the crisis lasted for more than 10 years. Most financial analysts and economists believe that the crisis was triggered owing to the collapse of the famous Wall Street—the financial hub of the US economy. Industrialized economies like the United States took a long time to recover. The unemployment rate sour to 25% alone in the United States in 1933.

Oil Price Shock of 1973:

The crisis prevailed during the fourth Arab-Israel war when the Organization of Petroleum Exporting Countries (OPEC) imposed a ban on exporting Oil to the western countries especially the United States in retaliation to their support to Israel during the war. This event also gave birth to a major financial crisis. The severe shortage of oil resulted in a quick spike in oil prices. Oil prices in the United States quadrupled. The inflation rate took several years to adjust.

Asian Financial Crisis 1997:

The crisis mainly hit the East Asia and the South East Asia in 1997. It originated in Thailand and spread to other trading countries like Singapore, Hongkong, Indonesia, Malaysia and South Korea, collectively known as the Asian Tigers. Due to lack of foreign currency reserves, the Thai government was forced to abandon its fixed exchange rate against the US dollar. This currency float resulted in a huge set back in Asian markets and investors withdrew billions of dollars of foreign investment. The International Monetary Fund (IMF) initiated bailout packages to help the worst affected countries from becoming default. It took years to normalize the conditions of the Asian Market.

Financial Crisis of 2007-08:

The financial crisis of 2007-08 is the most horrific financial crisis ever hit after the great depression of 1929 in the world history. The crisis started in the United States and spread across the globe. It affected other economies because the economic system of the world is inter-connected. The US being one of the biggest economies in the world, any turbulence in the United States will affect all inter-connected economies. The crisis began in the United States when the housing bubble collapsed. It followed the complete bankruptcy of one of the biggest investment banks of the time—Lehman Brothers. Millions of people lost jobs and the economic loss of the crisis is estimated in billions. It took around ten years to recover from the setback.