Financial Crisis refers to a different variety of conditions in which the asset prices decrease steeply

in value. During the crisis, the business owners and end-users are unable to pay their debts and
financial organizations suffer from shortages of liquid assets. The financial crisis is often linked
with an anxious situation in which the investors sell most of their assets and take out money from
their savings accounts as they thought that the value of those assets will drop if they rely on
financial organizations. It may have an effect on the economy of a region or throughout the world.
Crash of Stock market, currency crisis, a financial bubble are also the situations that can be named
as the financial crisis.

Causes of the Financial Crisis

There is no one single cause for the financial crisis. A great evaluation point to make is a financial
crisis is a result of a combination of factors often quite complex and twisted. Some of the key
causes are:

 Financial Market Failures: Financial instability is often caused by the people who inhabit
the markets themselves. People become a little bit overconfident in businesses, in their
ability to invest in a market and take more risks.
 Policy Failures: The market's financial instruments have become more complex that people
simply don't understand what the risk factors are.
 Structural Changes in the Global Economy
 Political Instability and unstable government

How to be prepared for the economic crash as an individual?

We as individuals will see an economic crisis at some point in the future. It's incredibly difficult
to actually predict when we are going to have the next recession.

 Dollar cost averaging: put in a specific amount of money into the markets on a monthly
basis. The goal here is to buy low and sell high.
 Risk tolerance capability: The financial advisors over at https://www.wealthry.com/
suggests that you should balance your portfolio with the age. As you get older you might
not be able to handle as much risk as you could when you're twenty.
 Preserve some physical assets or some precious metals like gold and diamond that can help
you when you are in very serious hardship.

Financial Crisis and the Developing Countries

The financial uncertainty and instability in developed nations are directly affecting the developing
nations. Developing countries are facing problems like the high cost of fuels, rising food prices as
they are dependent on the import or export commodities. Many Asian countries have suffered a
decrease in stock market and values of currencies. The slowdown in developed countries can also
increase the chances of the economic crisis in Asian countries too as Asian products and services
are global.

Policies for financial recovery and sustainable development

The country should start from the formation of simplified macroeconomic policies and bank
support plans to promote financial recovery and stability. The policies should be made or reformed
considering and ensuring the sustainable growth and development to prevent the cyclic crisis.

How a country can handle the economic crisis?

Financial Crisis in a single country can lead to a crisis in other countries coupled with that country
which at last can lead to the Global Financial Crisis. Some of the measures that a country can take
to handle the economic crisis are:

 The government should focus on the creation of stimulus packages to boost the economy
or to prevent a recession by increasing the employment and spending rate.
 The government can create public works programs during the crisis to sustain the peoples'
households.
 The country should focus on the proper regulation of the rules and policies throughout the
country and the policies should not be complex at all.
 The Country's policy should support large finance companies and banking systems.
 There should be good governance and the country should move towards political stability.

More comprehensive regulation and reformation of the International financial system

This involves the international banking and finance sectors for the reformation of the worldwide
financial organizations. Some portion of the reformation plan includes providing more support and
power to the poor and developing countries. However, the developed ones are resisting this
meaningful reformation effort. The rich countries should start to revise and work on how to
correctly reform the banking and finance system so that not only the developed countries but also
the developing countries can use the international policies that are more relevant to their situations.

The gravity and the time span of the current financial and economic crisis is to some extent a
result of the decreased confidence in the soundness and likelihood of the financial system. The
retrieval of the economic solidity also relies on the reinstatement of the business and end-users
confidence supporting the investment and spending. As an individual consider cashing out on some
profits so when a serious financial crisis hits you can start over.