Z Score,T Score, Percential Rank and Box Plot Graph
Presentation Global financial crisis
1. EFFECT OF SUBPRIME CRISIS & EURO ZONE
CRISIS ON WORLD ECONOMY
Name: Nilesh Saha Section: B
2.
3. Impact Of Global Financial Crisis
Impact on Stock Markets Globally
Losses to Investors
Freeze in Inter Bank Credit
Increasing Unemployment
Decline in Businesses Globally
Bailouts
4.
5. INTRODUCTION
“Subprime" refers to loans that do not meet Fannie Mae or Freddie
Mac guidelines
This is generally due to one or a combination of factors, including
credit status of the borrower, income and job history, and income to
mortgage payment ratio
The crisis represents the other side of a phase when a low rate of
interest, rising home prices and mortgage securitization brought
huge gains
Some termed it as the beginning of “the second great depression”
because of the enormous dislocation
Borrowers are considered as subprime because of poor credit
history & limited income and Lenders considered as subprime
because of greater risks & high returns
6. CAUSES OF SUBPRIME CRISIS
Beginning in the mid-1990s, government regulations began to
erode the conventional lending standards.
Fannie Mae and Freddie Mac hold a huge share of American
mortgages
The Fed’s manipulation of interest rates during 2002-2006
An SEC Rule change adopted in April 2004 led to highly
leverage lending practices by investment banks and their
quick demise when default rates increased.
Doubling of the Debt/Income Ratio of Households since the
mid-1980s
7. PROCESS OF SUBPRIME CREDIT CRISIS
Economic Environment
Low interest rates
Property bubble
Deterioration of
financing standards
Sluggish regulation
Financial innovation
Lack of transparency
Burst of property
bubble
Reaction of financial
institutions
Excessive financing –
search for yield
Spreading risks via
securitization where the
original risk can not be
seenTightening credit
conditions
Problems in fulfilling
subprime mortgage obligations
8. SUBPRIME CRISIS & ITS SPREADING IN THE GLOBAL FINANCIAL SYSTEM
Financing
possibilities
have narrowed
Cost of financing
has increased
Problems in fulfilling subprime mortgage
obligations
Losses of financial intermediaries and investors
Reassessing risks, and risk-taking
(banks, funds, investors)
Increase in counter-party risk, losses
of confidence
Impact on financial markets
and real economy
9. Impact Of SUBPRIME CRISIS
Stock Market
Capital Market & Asset Market
Financial Institutions
Home Owners
Rate of Unemployment
Minorities
Liquidity & solvency Crisis
10.
11. INTRODUCTION
The term indicates the financial woes caused due to
overspending by come European countries
This is also known as Euro Zone sovereign debt crisis
When a nation lives beyond its means by borrowing
heavily and spending freely, there comes a point when it
cannot manage its financial situation
The euro's value has decreased over the past few years
due to the European Debt Crisis.
12. The Euro Debt Crisis began
in 2008 with the crash of
Iceland’s banking system,
which spread to Greece
Spain, Portugal, and the
other nations later
followed Greece
COUNTRIES STATISTICS
France Debt/G.D.P: 81.7%
Unemployment. Oct 2011: 9.8%
S&P Rating: AAA
Germany Debt/G.D.P: 83.2%
Unemployment. Oct 2011: 5.5%
S&P Rating: AAA
Greece Debt/G.D.P: 142.8%
Unemployment. July 2011: 18.3%
S&P Rating: CC
Italy Debt/G.D.P: 119%
Unemployment. Oct 2011: 8.5%
S&P Rating: A
Portugal Debt/G.D.P: 93%
Unemployment. Oct 2011: 12.9%
S&P Rating: BBB-
Spain Debt/G.D.P: 60.1%
Unemployment. Oct 2011: 22.8%
S&P Rating: AA
13. CAUSES OF EURO ZONE CRISIS
Slow economic growth of the euro zone countries
Stress on banks around the world led to shrinking credit
availability
Increase in Government spending & Declined in tax revenues
Falling in Demand lead to decrease in Imports & Exports
Housing bubbles burst in UK , Ireland, Spain as well as US
Austerity has become part of the problem instead of the
solution
14. Impact of EUROZONE CRISIS
Interest Rate Policy
Fiscal Policy
Rate of Unemployment
Financial Market
Credit Policy & Debt Crisis
GDP Growth