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PARUL SHARMA
ROLL No -99
A STUDY OF GLOBAL FINANCIAL CRISIS AND THE ROLE PLAYED
BY RBI AND THE WORLD BANK AND IMF
INTRODUCTION
The year 2007 saw one of the most steep and synchronized economic downturn which was
characterized by successive shocks hitting the world economy starting with the financial markets – with
failures in credit markets in the US and elsewhere. The crisis was worst because of its pervasive nature;
it did not confine to the financial markets but had also severely disrupted economies on a wider scale –
affecting businesses and households around the world. Since July 2007, the global economy has been
experiencing unprecedented levels of financial turbulence. This was triggered by a downturn in the US
housing market. The instability grew steadily and was worsened with the collapse of Lehman Brothers, a
US investment Bank in September 2008. An understanding of the nature and characteristics of a global
financial crisis leads to a workable definition of financial crisis:
A financial crisis is a disruption of financial markets in such a matter and to such a degree that the
financial markets are unable to efficiently channelize funds… A financial crisis is thus marked by an
inability of the financial marker to function properly which leads to sharp contraction in economic
activity.
And this is exactly what happened in the recent global financial crisis beginning in July 2007. Moreover
when the financial crisis erupted in a comprehensive manner in Wall Street, there were some premature
notions among Indian policymakers for they argued that India would be relatively immune to this crisis
because of the “strong fundamentals” of the economy and the supposedly well regulated banking
system.
TENTAIVE CHAPTERIZATION
With this backdrop the researcher intends to make a study of the issue and proposes following tentative
chapterization:
An inquiry into the Causes, factors of the crisis and its impacts on the world
economy.
2. ROLE OF THE CENTRAL BANKS AND THE INTERNATIONAL FINANCIAL INSTITUTIONS
Policy responses of the central banks of the major economies and the IMF and
World bank.
3. LESSONS LEARNED
4. REFORMS REQUIRED
BIBLIOGRAPHY
International Financial Crises: Efforts to Anticipate, Avoid, and Resolve By Susan S.
Westin, Susan S. Westin Patrick S. Dynes Becky K. Kennedy Desiree W. Whipple,
Patrick.S.
India and the Global Financial Crisis: Managing Money and Finance By Y. V. Reddy
Lessons from the Financial Crisis: Causes, Consequences, and Our Economic Future By
Robert W. Kolb
Global financial markets: issues and strategies By Dilip Kumar Ghosh, Mohamed Ariff
Global Imbalances and the Financial Crisis, Volume 2009, Part 2 By Steven Dunaway,
Steven Vincent Dunaway, Council on Foreign Relations. Maurice R. Greenberg Center
for GeoeconomY