Page - 1

Purpose of this Article

Global Financial crisis has affected many countries across the globe. Many Economies were disturbed in one way or the other. Towards the end of October, the Bank of England said the world's financial firms had now lost £1.8 trillion ($2.8 trillion) as a result of the continuing credit crisis In this article an attempt is made to find out the reasons for this Global Financial Crisis and in what way it has impacted our Indian economy. At the end an attempt is made to suggest some measures to overcome these this financial crisis.

which also scrutinizes and audits all government accounts to ensure that expenditures are legally authorized and properly spent. Proposals for taxation or expenditures, however, may be initiated only within the Council of Ministers--specifically by the minister of finance. The minister of finance is required to submit to Parliament, usually on the last day of February, a financial statement detailing the estimated receipts and expenditures of the central government for the forthcoming fiscal year and a financial review of the current fiscal year.

Global Financial Crisis

The Global Financial Crisis, brewing for a while, really started to show its effects in the middle of 2007 and into 2008. The causes for this financial crisis are varied and there is no unanimity among factors responsible for financial crisis. According to one view crisis was started due to collapse of the US sub prime mortgage market. At the same time there was reversal of housing boom in other industrialized economies.

There are many technical explanations of how sub prime mortgage crisis came about. Sub prime mortgage crisis took place in US because American Financial System failed in two crucial responsibilities - managing risk and allocating capital. Regrettably, many of the worst elements in US financial system were exported to the rest of the world. Many economists say those crises are created by politics but not by economics.

The reasons for these crisis may be that the regulators

Another view expressed for Financial Crisis is large current account surpluses in China and a few other countries and at the same time US economy is suffering with deficits. As a result the countries with surpluses needed an investment destination which was US. This lead to huge flow of money into US economy and as a result the interest rates have been reduced. Due to this real estate boom created and when boom bubble was burst this lead to financial crisis.

• «Previous
• 1
• 2
• 3
• 4
• Next »

* Contributed by: -
Prof. T. Srinivasa Rao has done M.Com, M.Phil. ICWAI (F)& EMBA. Also has Diploma in Export Management. He is currently working as Lecturer in Commerce at Andhra Loyola College Vijayawada, Andhra Pradesh.