The financial crisis that occurred has indeed had a negative impact on the economy of a country as well as the global economy.
This article will reveal a summary of the 5 worst financial crises in history.
CREDIT CRISIS OF 1772
In the mid-1760s, the wealth of the British Empire was amassed through conquest and trade.
This has led to a continuous expansion of credit among British banks.
Trouble started on June 8, 1772, when Alexander Fordyce, who was one of the members of a British bank, suffered a loss of £300,000 in East India company stock investments and fled.
He left his partners Henry Neale, William James, and Richard Down with debts of about £243,000.
The news spread widely and quickly throughout England causing creditors to spring into action to withdraw their savings.
This has also caused panic in the banks in England after seeing many creditors who started queuing in front of the banks.
This crisis also spread to other European countries such as the Netherlands, and Scotland.
After 2 weeks, it was reported that 8 banks in London and then over 20 banks across Europe had collapsed.
This crisis is also known as the "Panic of 1772".
THE GREAT DEPRESSION 1929
The impact of The Great Depression lasted for almost 10 years causing huge losses to the economy, reduced production of industrial goods, and high unemployment rates.
This crisis is one of the worst economic crises in the 20th century.
The Great Depression occurred as a result of the collapse of the Wall Street market followed by unconvincing US government policy decisions.
In the US, the unemployment rate reached almost 25% at the height of the crisis by 1933.
OPEC 1973
The members of the Organization of the Petroleum Exporting Countries (OPEC), which consists of most of the Middle Eastern countries, have imposed an embargo or restriction on the US when the country involved acted to supply weapons to Israel in the fourth Arab-Israeli war.
This has caused a lack of oil supply and increased prices that have resulted in an economic crisis in the US and other developing countries.
The situation also triggered high inflation caused by the increase in the price of energy supply.
The economic crisis causes a situation of economic stagnation that occurs when either the amount of production decreases, is flat or increases slowly.
It took a long time for production to recover and inflation to decline.
1997 ASIAN FINANCIAL CRISIS
This crisis has affected the economies of Asian countries in 1997 which started in Thailand and quickly spread to other Asian countries including Malaysia.
The value of the Baht fell when the Thai government changed its exchange rate from a fixed exchange rate to a floating exchange rate.
A wave of panic swept through Asian financial markets causing the withdrawal of billions of dollars of overseas investment.
The IMF had to intervene by offering aid to countries that were experiencing economic problems due to the crisis.
2007-2008 FINANCIAL CRISIS
After the Great Depression of 1929, the crisis of the Great Recession of 2007 has become the worst financial crisis that has ever happened to the global economy.
It caused chaos to the world's financial markets as well as caused a housing bubble in the US which in turn resulted in the collapse of the largest investment company, Lehman Brothers.
The government had to issue a bailout that had never been issued before to restore economic activity due to the effects of this crisis.
