View
230
Download
0
Category
Preview:
Citation preview
7/31/2019 World Financial Crisis Final
1/31
Group 1:
Ajay GautamDhiki Lama
Mekh Bdr. KhatriPriyanka Siwakoti
Smita Shakya
Surendra Gurung
7/31/2019 World Financial Crisis Final
2/31
Page 2
Introduction
The USA is home to the 2008 world economic meltdown
Provoked unseen fears
The bankruptcy of the Lheman Brother in U.S.
7/31/2019 World Financial Crisis Final
3/31
Page 3
7/31/2019 World Financial Crisis Final
4/31
Page 4
7/31/2019 World Financial Crisis Final
5/31
Page 5
History of Financial Crisis
Wall Street Crash of 1929, followed by the Great
Depression
7/31/2019 World Financial Crisis Final
6/31
Page 6
Contd..
1973: oil crisis, oil prices soared causing the 1973-1974 stock
market crash
Secondary banking crisis of 1973-1975: United Kingdom
1980s: Latin American debt crisis - beginning in Mexico in
1982 with the Mexican Weekend1983: Israel- Bank Stock Crisis
1987: Black Monday - the largest one-day percentage decline
in stock market history
19891991: Unites States Saving and Loan crisis
7/31/2019 World Financial Crisis Final
7/31
Page 7
Contd
1990: Japanese asset price bubble collapsed
1992: The European financial crises
19941995: Economic crisis in Mexico
1997: Asian Financial and Economic crisis
1998: Russian financial crisis
20072011: Financial crisis of (2007-2011), followed by the
late 2000s recession and the 2010 European sovereign debt
crisis
7/31/2019 World Financial Crisis Final
8/31
Page 8
7/31/2019 World Financial Crisis Final
9/31
Page 9
Origins of Global Financial Crisis
7/31/2019 World Financial Crisis Final
10/31
Page 10
Causes of Credit Crunch
Poor underwriting standards for mortgage loans resulting in a boom in theUS housing market
Weak regulation and supervision of banks
Exposure to the sub-prime security backed financial assets and collaterised
obligations (CDOs)
Inappropriate policy incentives (very low policy rates or a prolonged easing
in the monetary policy stance) resulting in abundant liquidity
Global imbalances
Indebtedness has led to financial crisis
The Efficient Market Fallacy
7/31/2019 World Financial Crisis Final
11/31
Page 11
Impact Of Economic Crisis In Europe
The fragile economies of Europe were still struggling from World
War first.
They had borrowed a great deal of money from American banks
that the banks now wanted back. The deep economic crisis which
has broken out in the United States continues to engulf the
European states.
The European Union is at a loss about what to do in the face of
financial crises erupting one after another in the member
countries.
The crunch makes itself felt acutely not only in such peripheral
and relatively small economies as Greece, Portugal, Ireland and
Spain but also in the heavyweights of the Union like Italy and
even France.
7/31/2019 World Financial Crisis Final
12/31
Page 12
Contd..
The economic crisis is giving way to political tumult and splits.
The financial support to come from the IMF seems to be the major factor on
which the settlement of the problems harassing Greece and the others is
contingent
With U.S. buying power down, foreign businesses were less able to export
their products and were forced to fire workers.
Governments tried to protect themselves by passing high tariffs, making
foreign goods expensive.
Germany and France, both serving as the engines of the Union, have carriedout some bailout programmes.
The EU is now at the mercy of a group of countries like the US, China, Japan
and Russia and some big banks and investors
7/31/2019 World Financial Crisis Final
13/31
Page 13
Impact of Global Financial Crisis In South Asia
The global financial crisis (February 17, 2009 )
Growth in South Asia decelerated in 2008, falling from 8 percent in2007 to 6 percent. It is projected to decline to 5 percent in 2009,
before recovering to 6 percent in 2010.
India
GDP growth rate is now estimated at around 7 percent for 2008,down from 9 percent in 2007, and is projected to decline to around 5
percent in 2009.
China
Less affected by the financial crisis than other countries, due to itsmore closed financial system. This has led other nations to urge
China to lend a greater financial hand such as increasing its own
imports.
7/31/2019 World Financial Crisis Final
14/31
Page 14
7/31/2019 World Financial Crisis Final
15/31
Page 15
Impact, Problems & Challenges Of Economic Crisis In Nepal
Experiencing serious economic challenges by its own internal crisis
and global financial crisis too.
Major impacts of global financial crisis
Decreasing trend of export growth.
Increase in commodity price.
Disincentive for foreign direct investment (FDI).
Low capacity to spend development expenditure.
Increasing unemployment.
Adverse effect in tourism industry.
7/31/2019 World Financial Crisis Final
16/31
Page 16
1. Increase unemployment
Nepal is a small open economy.
Global financial crisis transmit to the economy of Nepal through the
foreign exchange, money, debt, credit, and capital markets.
Yearly about, 400,000 manpower has been added in the labor market of
Nepal.
Despite some relief in the employment problems of the country due to an
increasing access of Nepali people in the labor market abroad.
In the latter period, the number of non-skilled youths as well as educated
unemployed has also been increasing fast.
Problems and Challenges in the Nepalese Economy
7/31/2019 World Financial Crisis Final
17/31
Page 17
7/31/2019 World Financial Crisis Final
18/31
Page 18
Contd.
2. The impact on balance of payments (BOP)
The current account balance dropped to a negative of $47.1million in December, 2007 from a surplus of 13.3 million, a
year ago.
Fall in export, tourism receipts.
7/31/2019 World Financial Crisis Final
19/31
Page 19
Cont
3. Lack of improvement in investment climate:
Investment of the state and the private sector has been facing
so many problem.
Expected improvements have not been attained in economic
growth, poverty, unemployment, etc.
The major challenge has been the lack of favorable
investment climate in the country .
7/31/2019 World Financial Crisis Final
20/31
Page 20
4. High Inflation:
Although the price is declining all over the world in the wake of global
financial crisis for last few years, Nepal is facing a double digit
inflation.
It has adversely affected disadvantaged communities by the sharp price
increases of daily necessity items like rice, ghee, oil, sugar ,
vegetables. and so on.
Cont
7/31/2019 World Financial Crisis Final
21/31
Page 21
Contd
5. Energy Crisis
Electricity shortage has been a matter of another seriouschallenge in the context of Nepal.
This has resulted in a big decline in the overall productivity of
the country.
There is no possibility of additional electricity supply
immediately as the completion of hydro power projects takes
longer period.
7/31/2019 World Financial Crisis Final
22/31
Page 22
6. Poverty, Inequality and Discriminatory Attitude
7. Weak Performance of Public Enterprises
8. Effective Utilization of Resources and so on.
7/31/2019 World Financial Crisis Final
23/31
Page 23
7/31/2019 World Financial Crisis Final
24/31
Page 24
Practice to Remove Financial Crisis
The South Asian countries can make some effort to reduce the adverse
effects of the financial crisis and prepare the way for a resumption of rapid
growth in 2010.
First: Policy attention needs to focus on creating as much additional
fiscal space as possible to prop up the domestic economy whilepreserving macro economic stability.
Second: A careful look at expenditure priorities.
7/31/2019 World Financial Crisis Final
25/31
Page 25
Third: The ongoing efforts to increase the efficiency and
effectiveness of the banking sector must continue.
Fourth: In the face of sliding world demand, efforts to raise domestic
productivity and competitiveness become critical factors for
protecting export market shares.
Finally in an environment of constrained resources, greater attention toimproving implementation capacity and corruption prevention in public
spending becomes even more important.
7/31/2019 World Financial Crisis Final
26/31
Page 26
7/31/2019 World Financial Crisis Final
27/31
Page 27
7/31/2019 World Financial Crisis Final
28/31
Page 28
7/31/2019 World Financial Crisis Final
29/31
Page 29
7/31/2019 World Financial Crisis Final
30/31
Page 30
7/31/2019 World Financial Crisis Final
31/31
Page 31
Recommended