Financial contagion

Financial contagion

Financial contagion refers to the phenomenon when one country's economy is negatively affected because of changes in the asset prices of another country's financial market.

Causes

There are many contentions as to the cause(s) of financial contagion; critics claim that it is the result of a form of economic imperialism. However, others point out that the global economic system results in a series of interdependencies which make contagion inevitable during a particular country's financial troubles.

Examples

One particular example of this can be seen during the Asian financial crisis of the late 1990s. A more recent crisis where disruptions quickly spread into other areas of financial markets is the subprime mortgage crisis in August 2007.

ee also

* Financial crisis
* Stock market crash
* Flight-to-Liquidity

External links

* [http://www1.worldbank.org/economicpolicy/managing%20volatility/contagion/ World Bank]
* [http://economics.about.com/cs/moffattentries/a/contagion.htm about.com article]


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