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Financial Crisis

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Submitted By deathnote128
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I started off the project knowing very few things about financial market and services (FMS). However, after 4 weeks of research and many enthusiastic discussions among our group members, it has helped me understand a lot more about FMS as well as the financial crisis, specifically sub-prime crisis.
To begin, from doing this project I have come to know that financial markets in the world are interconnected. When US financial system collapsed, with the demise of some of the biggest financial institutions in US, it jeopardised the whole world’s economy. Inflation soars, credit crunch were one of the few horrible effects that the breakdown of US financial system affected financial system worldwide. At the same time, the crisis shook investors’ confidence across the world, which led to low liquidity in financial market and subsequently a devastating global economy meltdown.
Furthermore, I have learnt that risk management is indispensable in a financial system, a “make or break” factor. Though taking risk may provide us with a higher return, we can never be overly greedy and take too much risk without handling them probably as they may back-fire. What happened in US is an exact example of what we call “lesson learnt the hard way”. It has definitely shown the world’s investors how immensely vital risk management is in a financial system, proving its undeniable influence on financial market and services.
In addition, by doing this project, it has taught me the importance of regulations. One of many reasons contributed to the shocking financial crisis in US is the lack of regulations. It allowed banks to borrow huge amount of money from central bank, leading to cheap credit, and lend to financially instable borrower at their own liberty. It therefore resulted in a dreadful sub-prime crisis that affected US as well as the whole world economically. Additionally, the lack of...

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