Financial Crisis And Its Effects On Businesses,...

Introduction The worldwide impact of the recent financial crisis outlines the importance of having a decent understanding of crises. Latest episode has definitely showed that status of economic as well as the financial performance is greatly affected by financial turmoil. During the crisis, world stock markets have been collapsed, largest financial institutions have been bought out or fallen, and the wealthiest nations like UAE, UK of USA had to stand up and aid their financial systems as well as the economic ones. World economic activity was a common topic in the newspapers for many years after it has occurred. â€Å"The present financial crisis is a culmination of many systematic factors. The economic crisis has made us to believe that world†¦show more content†¦It was a global bank which massively effected world financial status. It was the worst world recession in all economies in last 80 years. Even today in many wealthy countries GDP is below its pre-crisis positions, especially i n EU (Europe) where it has evolved in the famous â€Å"Euro-crisis† (Economist, 2013). Not only EU and USA but the whole world was affected. Inflation started to be the serious problem, due to the high volume of printed money which had to help to bail the banks. This leaded to devaluated US dollar which has created inflation as such. People who have suffered the most are taxpayers in the USA. This made the distance between social classes larger and larger. According to (Malpass, 2010) one the main reasons that caused the crisis is a Housing Market in US. Between 1997 and 2006, average house price has increased by 122%. In the end of 2001, national home price average median was ranged from 2.6 to 3.2 times median income per household. Proportional ration has grown to 4.0 in the beginning of 2004 and 4.6 in 2006. This has resulted to housing bubble â€Å"A run-up in housing prices fueled by demand, speculation and the belief that recent history is an infallible forecast of the future.† (Investopedia, 2014). Many householders started to refinance their estates at lower interest rate, or even taking second mortgages. In the middle of 2008, housing prices had been declined by 20% comparing to their 2006 peak. Easy loans and trend of house