Principles of Managerial Finance, 15th Edition

2.5 Financial Markets in Crisis

1. LG6

Modern economies are vulnerable when financial markets are in a state of crisis. For example, in 2008, the U.S. financial system, as well as financial systems around the world, appeared to be on the verge of collapse. Troubles in the financial sector spread to other industries, and a severe global recession ensued. In this section, we outline some of the main causes and consequences of the financial market crises that led to the Great Recession.

Financial Institutions and Real Estate Finance

In the classic film, It’s a Wonderful Life, the central character is George Bailey, who runs a financial institution called the Bailey Building and Loan Association. In a key scene in that movie, a bank run is about ...