The Impact of the crisis on corporate failure in Malaysia was seen through indicators such as company liquidation, default in debt repayment, and noncompliance with reporting as well as rating action Khong et al. The prediction and prevention of financial distress are one of the major factors that should be analyzed in advance as an early warning signal and to avoid the high cost of bankruptcy.
Bankruptcy involves costs for both the shareholders and stakeholders. Therefore, an effective way to predict financial distress is crucial in assisting and facilitating the management of the company to act immediately before the financial problem and getting worse and it is too late to take remedial action. Although that were many attempts to promote various methodological approaches to predict financial distress, the usefulness of financial ratio has been acknowledged by many.
As mentioned by Ugurlu and Aksoy , the early researches we focused on the comparison of value ratios on failed and non- failed firms. The first signals of distress are usually violations of debt covenants coupled with the omission or reduction of dividends. As long as cash flow exceeds current debt obligations, the firm has enough funds to pay its creditors.
The key factor in identifying firms in financial distress is their inability to meet contractual debt obligations. There are several indicators and information sources that can help in the prediction and prevention of financial distress.
This topic is relevant for the present days. The benefit of writing a basic essay about financial crisis is that the writer is actually living in times of its happening. That gives him a chance to present subjective opinion of the current situation from financial and economic point of view of certain countries. Past two decades were famous for a number of financial crises in all the economy of many countries worldwide. As a rule, every crisis is followed by economic recessions, and sometimes effect it makes is absolutely devastating.
The crucial nature of crisis in financial sphere is a topic that interests many researches. Economists try to analyze the reasons and mechanism of the crisis, predict possible ways of its development and evaluate the damage it will cause.
One of the research aspects is comparing crises in different countries and trying to create a plan for avoiding their negative afterwards effects. There are different mechanisms of the financial crisis development. Every country has some peculiarities, but there is a specific pattern for describing common periods of financial crises.
Banks lend people more money than they can afford to take. The reason why this happens is that there is very low possibility that all depositors will ask their money back at the same time.
If this happens, the banks will definitely fail. Financial crises have the roots in the easy credit expansion. Reinstitute the money that are backed by real commodities. Ideally, all currency should be backed by gold, as gold is the only money that evolved over time.
It is important to understand that gold and silver is money for market when fiat money are for government. Take the issuance of money away from the hands of government. Different kinds of manipulations will be made as long as they have a control of issuance. This solution will attack the problem at the root and save the national finance from further crises. These are possible ways of solving the problem of financial crisis if at least one action from this list can be successfully done, all the countries will feel remarkable improvement.
Order now Custom writing service. There are several important aspects you should understand writing essay about financial crisis in accordance with essay basics. Narrow down the topic and review one industry that financial crisis has influenced the most. But the main fault had beginning in inconsistent European integration process. The EU has chosen halfway solution of economic integration — they have accepted just common monetary policy without the fiscal union.
Low interest rate fixed by ECB caused that some of the marginal economics have been growing too fast and on the opposite side developed economics have been growing really slowly. In the Spain low interest rate after year caused a boom in construction and Spanish economy became extremely dependent on this type of sector. But the inflation rate was significantly higher than interest rates, so finally real interest rates were in negative values.
Thanks to that in the Spain mortgages were cheap in that time and its demand of private sector was enormous. Other inequality at market was showed when with growing price of real estate also grew its demand.
Construction and related sectors have a high share of national income in Spain, so crisis stroke there with bigger thrust. If we look for achieved agreements in EU, we can see that in future Euro-zone states accepted the Stability and Growth Pact as some kind of substitute for common fiscal pact. Regardless of fines the Portugal has broken it in , lately followed by the France and the Germany, so in monetary union states decided to make its repressive part weaker. However, as we know, the Greece received financial help in May For year were planned start of permanent ESM, but finally it was in progress from July because doubt crisis intensified and both mechanisms worked at the same time.
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The essay will first place the possible causes that led to the downturn in the financial position of the various economies across the world and finally it will talk about the methods that UK government can adopt to prevent itself from the hazards of next financial crisis. This essay will present why the economic crisis, a global issue, is the greater challenge than pandemics to U.S. national interest. Regarding pandemic challenges, the U.S. has among the world’s best health care.
Included: economics essay content. Preview text: Ever since the economic crisis has hit the most developed and prosperous economies of the world, there have been experts trying to research and suggest all that went wrong. It is indeed comparable in magnitude with the Great Depression of the s. Cannot even start writing an essay about financial crisis due to lack of ideas? We offer you a sample paper on such topic, which can serve as a basis for your personal financial crisis essay.