Financial Crisis And Its Effects On Financial Institutions

The financial crisis in 2007-2008 in the United States was one of the greatest financial depressions the country has ever faced after the Great Depression. The paper gives out the details of the chain of events which led to the crisis to occur. I discuss the main actors and institutions involved in the crisis. The impact of the crisis on financial institutions, small and large businesses and at an individual level is discussed.. The government and major financial institutions had to take various remedial measures to improve the economy and restore balance. The focus of the paper would be to clearly explain the chain of events that occurred. These chain of events give a clear understanding of why there was an acute credit crunch in the country. INTRODUCTION : A financial crisis is a situation on which an asset devaluates i.e. the asset valuation decreases than it normal valuation.( Wikipedia, the free encyclopedia ) .The financial crisis in the United States started in 2006 when there was an acute credit shortage in the market. This credit shortage was mainly relevant to the housing market in the United States. This all began when New Century Financial Corporation, a leading mortgage lender to risky borrowers, filed for bankruptcy (Viral Acharya , The Financial Crisis of 2007-2009: Causes and Remedies ). The federal regulatory board which was appointed after the Great Depression in 1990 was ineffective Dhruvik U. Patel UIN: 652499386 in doing its part to govern theShow MoreRelatedFinancial Crisis And Its Effects On Financial Institutions871 Words   |  4 PagesThe recent financial crisis has a huge impact on systemic Important Financial Institutions; it’s distressing effect can be felt in almost every business area and process of a bank. A fairly large literature investigates the impact of financial crisis on large, complex and interconnected banks. The great recession did affect banks in different ways, depending on the funding capability of each bank. Kapan and Minoiu (2013) find that banks that were ex ante more dependent on market funding and had lowerRead MoreProblems Associated With The Financial Crisis1165 Words   |  5 Pagesinitial financial problems were concentrated in institutions exposed to mortgage securitization. But how it is that financial imbalances were transmitted into macroeconomic disruptions? 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