What Is Fincial Crisis ?

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Finincial crisis is something that doesn't happen too much now adays but is something that happend regularly in the past.As we know England has so many banks such as: Lloyds, Natwest, Santander ,Barclays and HSBC but they don't play high roles when it comes to financial crisis.Banks faced alot of financial crisis, especially the bank of England.

MEANING

Financial crisis includes any variety of situations that the financial essets faces. When they suddenly lose a large amount of money, it's called financial crisis.In the 19th and early 20th century many financial crisis were associated with banking panics and many recessions coincided with these panics.

WHAT MAKES THIS HAPPEN?

Banks provide loans as we know, but by doing this, they earn alot of money because there is something called the interest. This means you have to pay extra than what they provided you in return.But what people use to do was unexpected and illegal.They lent money from banks giving valid reasons such as:

.money for buying house

.to buy cars

.Or to buy expensive other.

After buying at least one of these things, people can't afford to return the money either by being unable by losing body parts and not going to work or just doing illegal other.Banks lose great part of their nominal value with these kind of things being the reason.

EXAMPLE

2008 happend to be the worst economic disaster. During the preventing proccess, a great recession was brought up and that's when housing prices fell below 40%. Two years after the recession ended the unemployment was still above 9%(without including the discouraged people who gave up looking for work)

CAUSES

In 2006, the economy was not in a good position.When the housing prices started to fall, the realtors thought the housig market would return to a more sustainable level but what they didn't realise was that there were too many homeowners with questionable credit.Banks allowed people to take loans more than 100% of their the homes value, this pushed banks to make investments in subprime areas, without it being the underlying cause.

WORDS MEANINGS

recession-a period of temporary economic decline during which trade and industrial activity are reduced.

economy-the state of a country or region in terms of the production and consumption of goods and services and the supply of money.

offering good value for money.

loans-a thing that is borrowed, especially a sum of money that is expected to be paid back with interest.

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