Wider economic crises

The Economic Crisis is a major problem in the context of world.Due to crisis, the world has been facing recession, depression,etc. So that, negative GDP growth lasting two or more quarters is called a recession. An especially prolonged recession may be called a depression.

Most of countries are trying to minimise its wider economic crisis, some economists have argued that many recessions have been caused in large part by financial crises. One important example is the Great Depression, which was preceded in many countries by bank runs and stock market crashes. The subprime mortgage crisis and the bursting of other real estate bubbles around the world has led to recession in the U.S. and a number of other countries in late 2008 and 2009.

This is a main issue for developed countries like USA, JAPAN,CHAINA etc.

Leverage is most popular measurement for financial crisis.Leverage, which means borrowing to finance investments, is frequently cited as a contributor to financial crises. When a financial institution (or an individual) only invests its own money, it can, in the very worst case, lose its own money. But when it borrows in order to invest more, it can potentially earn more from its investment, but it can also lose more than all it has. Therefore leverage magnifies the potential returns from investment, but also creates a risk of bankruptcy.