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Finacial Crisis: Presented By: Muhammad Nouman Ali Mehran

The document discusses financial crises, providing definitions and examples of some major crises throughout history. It focuses on the Global Financial Crisis of 2007-2008, explaining that it originated in the US from the bursting of the housing bubble and spread to European countries. The crisis impacted economies worldwide through reduced growth, higher unemployment, and decreased financial flows. It was caused by imprudent mortgage lending and the housing bubble. While advanced economies implemented bailout packages and expansionary fiscal/monetary policies, the crisis negatively impacted Pakistan through reduced GDP growth, higher deficits, and inflation.

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Usama Qureshi
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45 views11 pages

Finacial Crisis: Presented By: Muhammad Nouman Ali Mehran

The document discusses financial crises, providing definitions and examples of some major crises throughout history. It focuses on the Global Financial Crisis of 2007-2008, explaining that it originated in the US from the bursting of the housing bubble and spread to European countries. The crisis impacted economies worldwide through reduced growth, higher unemployment, and decreased financial flows. It was caused by imprudent mortgage lending and the housing bubble. While advanced economies implemented bailout packages and expansionary fiscal/monetary policies, the crisis negatively impacted Pakistan through reduced GDP growth, higher deficits, and inflation.

Uploaded by

Usama Qureshi
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Finacial Crisis

Presented by:
Muhammad Nouman Ali
Mehran
Definition
• A financial crisis is a disturbance
to financial markets. associated typically with
falling asset prices and insolvency among
debtors and intermediaries, which spreads
through the financial system, disrupting the
markets capacity to allocate capital.
5 of the World’s Most
Devastating Financial Crises

• The Credit Crisis of 1772


• The Great Depression of 1929–39
• The OPEC Oil Price Shock of 1973
• The Asian Crisis of 1997
• The Financial Crisis of 2007–08
History and background of
the financial crises 2007-08

Global Financial Crisis emerged in


2008 as a result of bursting of US
housing bubble. Global Financial
Crisis is considered to be the worst
crisis since the Great Depression of
1930’s. Crisis originated in United
States and European countries with
the failure of Banks like Lehman
Brothers, Bear Stearns. 
Impact of crises
• Economic growth

• Unemployment

• Poverty effects 

• Confidence in financial institutions 

• Severe competition 

• Financial loss
Causes of the crises
• Imprudent Mortgage Lending

• Housing Bubble

• Failure of regulatory agencies


Channel of
Transmission
• Financial integration
• Trade
• Reduced financial flow
• Inequality 
Financial crises and policy response

• The US has announced a $700 billion bailout package. 


• European Union bailout packages ran about $2.3 trillion.
• Macroeconomic policy measures were also adopted as advanced economies
pursued an expansionary fiscal and monetary policy. 
• European Union has taken some other measures as well.
Impact on pakistan

• Pakistan’s GDP growth rate came down. 


• Witnessed high fiscal and current-account deficit
• Inflation which was an international problem also affected Pakistan. 
• Pakistan’s macroeconomic indicators showed very poor performance 
• FDI came down from $5410 million in 2008 to $3720 million in 2009.
• Trade Deficit rose to 12.8 % of GDP in 2008.
Conclusion

• Pakistan’s deteriorating macroeconomic conditions after the Global Financial Crisis had
resulted in sharp downfall in GDP growth rate.

• Real GDP growth rate declined significantly in 2008 as it reached to 1.6 % and in 2009 it
rose slightly to 3.4 %.

•  Under IMF agreement Pakistan has to adopt tight fiscal and monetary policies.

• State Bank of Pakistan has increased discount rates to curb inflation but it has also hampered
economic growth.

• Private investment is restricted due to increase in discount rates.


Thank you

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