Financial crisis | Meaning | Causes of financial Crisis


Financial crisis simply means  crisis in economy of any country relates  to finance .financial crises is any of board variety of situation in which some financial assets suddenly lose a large part of their nominal value or the market value of assets become down which make financial market weak and low in value .

The above graph  show the situation on which the value of something before i buy it was something but after some time it lose it value in market which can be Due to many reasons it can be due to demand and supply or change in value of  raw material or some other factors are also responsible for the above changes .
Financial crisis are of different types some of them are related to banking and some are international Financial trade / Import And Export .
In the 19th  and early 20th centuries many financial crisis were associated with banking panics and many more types . stock market crashes and Bursting of other financial bubbles are also or some Part of financial Crisis .

Example Due to Which a financial market crisis arises

1. Mismatch In assets and Liability : 

Mismatch in assets and liability is usually occurs in banking sectors and causes banking crisis in this situation the risks associated with an institution debts and assets are not appropraitely aligned .
For example :
Bank offer general public deposit account which can be withdrawn anytime to raised the long term loans from that amount and provide that amount to house owners and businessman as along term loan so the mismatch between the banks short liablities and its long term asseta is seens to be as one of resons that cause bank runs.

so this example explain the mismatch suaition very well


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