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Global Financial Crises : Bindings on India

Author

Listed:
  • Dr. Anshul Sharma

    () (Mangalmay Institute of Management Studies, Greater Noida.)

  • Dr. Amit Gupta

    () (Mangalmay Institute of Management Studies, Greater Noida.)

Abstract

The intensification of the global financial crisis, following the bankruptcy of Lehman Brothers in September 2008, has made the current economic and financial environment a very difficult time for the world economy, the global financial system and for central banks .The global financial crisis originated in United States of America. Investment banks have collapsed, rescue packages are drawn up involv-ing more than a trillion US dollars, and interest rates have been cut around the world in what looks like a coordinated response. Leading indicators of global economic activity, such as shipping rates, are declin-ing at alarming rates. The current financial crises in the U.S. have originated in the indiscriminate lending of housing loans in that country’s sub-prime mortgage market. Among the clients were the investors with poor credit histories or insufficient financial resources. Sub-prime lending has resulted in high levels of defaults. The banks were laying huge bets with each other over loans and assets. Different views on the reasons of the crisis include boom in the housing market, speculation, high-risk mortgage loans and lending practices, securitization practices, inaccurate credit ratings and poor regulation of the financial institutions. The financial crisis has not only affected United States of America, but also European Union, U.K and Asia. The global crisis has hit India through a “sudden stop†of capital inflows and a collapse of both external and domestic demand. The growth of the economy dropped to 6.7 per cent in 2008-09 (April-March) from 9.0 per cent in the previous year and is projected to decline further in 2009-10 to about 5.0 per cent. In this study I will attempt to provide my interpretation of the unfolding of the present global financial crisis; how it is affecting us; why the Indian financial sector has been able to weather the crisis relatively well; the analytics of our policy response; and, finally, some implications of its longer lasting effects.

Suggested Citation

  • Dr. Anshul Sharma & Dr. Amit Gupta, 2010. "Global Financial Crises : Bindings on India," Journal of Commerce and Trade, Society for Advanced Management Studies, vol. 5(2), pages 80-86, October.
  • Handle: RePEc:jct:journl:v:5:y:2010:i:2:p:80-86
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    File URL: http://www.jctindia.org/oct-2010/v-5-i-2-jct-13.pdf
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    References listed on IDEAS

    as
    1. Rudger Dornbusch & Ilan Goldfajn & Rodrigo O. Valdés, 1995. "Currency Crises and Collapses," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(2), pages 219-294.
    2. Guillermo A. Calvo, 1998. "Capital Flows and Capital-Market Crises: The Simple Economics of Sudden Stops," Journal of Applied Economics, Universidad del CEMA, vol. 1, pages 35-54, November.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Infrastructure funds; Mutual funds; Thematic funds and Sectoral funds.;

    JEL classification:

    • A0 - General Economics and Teaching - - General
    • C0 - Mathematical and Quantitative Methods - - General

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