Financial Crises

Credit Management

 Group Members:
Rameez Tariq
Adil Arshad
Amir Alvi
Bilal Hussian
Inayat Karim
Masood Anwar
Hamid Raza
Introduction

Capitalism is an economic system in which land labor

production pricing and distribution are all determined by
the market.

The term financial crises is broadly used for many things

means if there is great loss happen than its called
financial crisis but its mainly related to banking panics.
Other situations in which we often use this term is in
stock market crashes.
The global financial crisis in 2008-09 which are still on the
go, they actually started from the 20th century and they have
been increasing since then.

In the end of 20th century the U.S housing prices after a

multiyear started declining, the mortgage prices had been at
a very high rise before that and suddenly they started
declining at the end of 20th century.
Pakistan seems to be one of the hardest hit with this global
crisis. Its economy is already in crises. Saudi Arabia has
refused to give Pakistan a financial concession on the oil
trade.
Causes of the Crisis
 Fundamental mispricing in the capital markets
.
 Mistakes made by the banks by keeping the federal
funds rate too low for too long created bubble and
housing bubble

 Plus the failure to control poor underwriting standards in

the mortgage markets
 The Crisis Getting Global
 Europe

 Africa

 Asia
The Financial Crisis and
Pakistan:
Two Type of Crises

1. Economic Crises

2. Political crises
Economic Crises
 Inflation
 Trade deficit
 Balance of payment
 Foreign exchange reserves
 Circular debt
 Poor performance of banking sector
 GDP growth rate Decline
Effects of Crises
 Weaker export revenues
 Further pressure on current accounts and balance of
payment(BOP)
 Lower investment and growth rates
 Lost employment
 Lower growth translating into poverty
 More crime, weaker health systems and even more
difficulties
 Meeting the millennium development goals
Inflation
 Rising food and fuel prices have been a major source of
inflationary pressure in South Asian countries especially
Pakistan.

 In the year 2009 core inflation rose to 18% from the

14.7% 2008.
How Tackle the Situation?
 Tax breaks will be given to the industry to produce the
product.
 Agriculture sector needs a greater support
 Increasing supporting programs for the labor demanding
activities.
 Reduction of the financial policy and decreasing the
rates of productive sector
 Cash subsidies
THANKS