Financial instability occurs when problems (or concerns about potential problems) within institutions, markets, payments systems, or the financial system in general significantly impair the supply of credit intermediation services - so as to substantially impact the expected path of real economic activity.Jun 3, 2011
What are the effects of financial instability?
Major instability can lead to bank runs, hyperinflation, or a stock market crash. It can severely shake confidence in the financial and economic system. A common measure of stability at the level of individual institutions is the z-score.
What does political crisis mean?
In political science, a constitutional crisis is a problem or conflict in the function of a government that the political constitution or other fundamental governing law is perceived to be unable to resolve. There are several variations to this definition. The crisis may arise from a variety of possible causes.
What is the legal definition of a crisis?
crisis situation means an emergency event at which the state of danger or emergency is declared; Sample 1.
What is the meaning of social crisis?
A social crisis is any change or event that pushes a government, nation, or people into such severe pressure that a breakdown of law and order may
What causes financial instability?
Four factors typically help initiate financial instability: (1) increases in interest rates, (2) a deterioration in bank balance sheets, (3) negative shocks to nonbank balance sheets such as a stock market decline, and (4) increases in uncer- tainty.
What is financial stability and why is it important?
Financial stability is important as it reflects a sound financial system, which in turn is important as it reinforces trust in the system and prevents phenomena such as a run on banks, which can destabilize an economy.