Turbulent Processe In Financial Markets - Contagion Mechanism

The current economic crisis, present in all major economies, had as a starting point the subprime crisis in United States. From a financial markets crisis, it has turned into a real economy crisis and due to the globalization it has spread worldwide. The extent of recent financial crisis and consequences of contagion effect have drawn attention from economists worldwide. The crisis is spreading from one country to another leading to the phenomenon of contagion. Common feature of all financial crises is that a specific country event is quickly transmitted in markets around the globe. Global financial crisis has seriously affected all segments of financial markets and highlighted the need to improve regulatory standards and increasing surveillance in all markets of the global market components, implementation of all financial entities to ensure greater transparency in their activities, investor protection and minimize risk investment. To conclude, understanding the contagion’s causes and its consequences is an important lesson.