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The Global Financial Crisis and Its Effects

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  • Malcolm Edey

Abstract

The global financial crisis has been one of the most significant economic shocks in the post‐war period. At its core, the crisis originated in credit markets in developed countries – centred particularly in the United States, the United Kingdom and Europe – but the fallout has had a significant effect on activity in every country and region. As the crisis intensified, there was a large swing in the appetite of world financial markets for risk, and in their capacity to accept risk. The result was a shift from the easy credit conditions that had prevailed for some years to a situation of tight credit and in some cases dysfunctional markets. This was accompanied by a loss of consumer and business confidence, with significant effects on global activity. This article focuses on the main causes of the crisis, how it has affected the world economy, and how governments and central banks have responded.

Suggested Citation

  • Malcolm Edey, 2009. "The Global Financial Crisis and Its Effects," Economic Papers, The Economic Society of Australia, vol. 28(3), pages 186-195, September.
    • Handle: RePEc:bla:econpa:v:28:y:2009:i:3:p:186-195
    DOI: 10.1111/j.1759-3441.2009.00032.x
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    1. Reinhart, Carmen M. & Rogoff, Kenneth S., 2013. "Banking crises: An equal opportunity menace," Journal of Banking & Finance, Elsevier, vol. 37(11), pages 4557-4573.
    2. Stijn Claessens & M. Ayhan Kose & Marco E. Terrones, 2009. "What happens during recessions, crunches and busts? [Business cycles for G-7 and European countries]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 24(60), pages 653-700.
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    Cited by:

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    5. Mehmet Sahiner, 2024. "Volatility Spillovers and Contagion During Major Crises: An Early Warning Approach Based on a Deep Learning Model," Computational Economics, Springer;Society for Computational Economics, vol. 63(6), pages 2435-2499, June.
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    7. Bilgili, Faik, 2017. "Piyasa ekonomisine geçiş süreci ve sonrasında Türkiye'de GINI katsayılarının analizi: Alternatif GINI formülü yaklaşımı [During and after the process of transition to market economy, an analysis of," MPRA Paper 81043, University Library of Munich, Germany.
    8. Amel Farhat & Amal Hili, 2024. "The performance of compliant stocks during the Covid-19 crisis," Journal of Asset Management, Palgrave Macmillan, vol. 25(1), pages 70-95, February.
    9. Faik Bilgili, 2018. "Piyasa Ekonomisine Geçiþ Süreci ve Sonrasýnda Türkiye'de GINI Katsayýlarýnýn Analizi: Alternatif GINI Formülü Yaklaþýmý," Isletme ve Iktisat Calismalari Dergisi, Econjournals, vol. 6(1), pages 36-58.
    10. Alexander Khreish, 2024. "Evaluating Australia's financial conditions: A comparative analysis and extension of a dynamic factor model index," Australian Economic Papers, Wiley Blackwell, vol. 63(S1), pages 47-58, May.
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    12. Günsür, Başak Tanyeri & Bulut, Emre, 2022. "Investor reactions to major events in the sub-prime mortgage crisis," Finance Research Letters, Elsevier, vol. 47(PB).
    13. Yousaf, Imran & Beljid, Makram & Chaibi, Anis & Ajlouni, Ahmed AL, 2022. "Do volatility spillover and hedging among GCC stock markets and global factors vary from normal to turbulent periods? Evidence from the global financial crisis and Covid-19 pandemic crisis," Pacific-Basin Finance Journal, Elsevier, vol. 73(C).
    14. Da Silva, Sergio, 2014. "Why Not Use Robots to Stabilize Stock Markets?," MPRA Paper 60567, University Library of Munich, Germany.
    15. Javid Iqbal & Khalid Riaz, 2022. "Predicting future financial performance of banks from management’s tone in the textual disclosures," Quality & Quantity: International Journal of Methodology, Springer, vol. 56(4), pages 2691-2721, August.
    16. Javid Iqbal, 2019. "Managerial Self-Attribution Bias and Banks’ Future Performance: Evidence from Emerging Economies," JRFM, MDPI, vol. 12(2), pages 1-32, April.
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