WHAT are THE CAUSES OF OUR PRESENT FINANCIAL CRISIS?

Expert Solution

in the beginning of 2020 and around in end of march the global market start crashing due to the pandemic of COVID-19.covid 19 has completely shut down the growth process as well as growth rate.the major impact concerned with the financial crisis due to COVID-19 can be elaborated ahead-

UNEMPLOYMENT-due to lack of production activities the economy is facing high level of unemployment in the economy,which results in low level of demand and burden on government.this is a very critical situation which may leads to vicious circle of poverty.
JOB RISK AND UNCERTAINTY-several people are facing job risk.due to job risk they are uncertain and are liquidating their securities and fund.they have declined their demand in the economy.
BANKING CRISIS- banks are under stress for the increasing NPA(non performing assets) because due to COVID-19 a large sector of consumer based has lost their jobs and in future they won't be able to repay their debts,bills,EMI on time.this the reason why banks are not in favor of new credit lending to any party.banks are creating huge provisions to against the adverse impact of corona pandemic,all these are going to show the stress on the banking financial books.furthermore, due to panic situation people are liquidating their deposits and banks are facing liquidity issues.
LENDING ISSUES-when banks are not providing funds to the business concerns , several start up ideas are suffering to continue there businesses.production and activities are hardly operating.
PRODUCTION SECTOR CRISIS-due to low level of demand,the production sector is intended to sell their existing and unsold product which resist them to continue the production process,therefore there is hardly any requirement for the workers and labors concerned with the production process.

above points are the major reasons for the financial crisis in the economy.

Rahul Sunny answered 7 months ago

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