Effects of financial crises
Introduction
Given this evolution, the percentage represented by the savings banks in the total credit volume ascended to exceed the banks: 49 % for the boxes, compared to 46 % of the banks at the end of 2007, while in the year 2000 were the banks that offered more than 50 % of the credit the cooperative sector, meanwhile, maintained a stable share close to 5 %. On the other hand, during this period of expansion the country’s economy showed great GDP growth, with a positive macroeconomic evolution, which became visible in the exponential growth of the employment rate.
Developing
During this period, including an active participation of the female sector, a demographic expansion with population growth of almost 5 million people during this period, allowing immigrants entry. As indicated in previous sections, during the years 2000-2007 there was a rapid growth in the volume of credits and the real estate sector, allowing a great expansion in the financial sector and especially of the savings banks, the latter for 2007 They contributed a large percentage of system credits, which generated great profitability.
Great sources of financing and a favorable solvency situation for credit entities. However, by the end of this period, a trend change began to show. It is mediated 2007 when the symptoms of the financial crisis began to be observed international The world economy that depends on the financial sector was always accompanied by high risk levels.
Mainly due to the levels of indebtedness of the private, financial and non -financial sector. The first effects were the almost immediate paralysis of the financing markets, where the interbank entered, as well as a rebound in risk rates generating a hardening of financing conditions for the private sector, starting in the United States and then spreading to others economies including those of the Euro area and therefore Spain. According to López the main cause of this domino effect was created by US banks themselves.
Which were responsible for titling the mortgage loans to obtain greater liquidity and thus generate more mortgage credit, these titles were bought by other entities (inter banks) which returned to title it, generating a very complex fabric involving emitter entities, titulization managers, Liquidity supplier entities, qualification agencies, insurance and final investor. When American mortgages stop canceling, a chain reaction is generated that affected endless financial entities, investment funds, savings banks, among others.
What entailed the default of title and the abrupt fall of the world economy. The foregoing led to distrust in financial institutions, stopping service in the banking market, generating a credit drowning in the sector mainly in Spanish and therefore in the productive system of the, eliminating financing connections and completely paralyzing the economy. That is, when the credit is restricted in the banks product of distrust, the Spanish economy is affected by losing the liquidity that is needed to keep it operational, as shown in the following graphics.
In this context, the integration and interconnections that existed between credit entities caused instability to spread quickly in all world economies, causing the greatest financial crisis. Between the increase in financing conditions and low credit availability, it generated that many companies were forced to adjust the workfor A recession in many countries, in the same way affecting emerging economies.
Regarding the measures taken by the main monetary authorities that acted international Crisis impact. The behavior of monetary policy changed dramatically, the central banks of the main economies worldwide decreased the types of interests, implemented measures to make the provision of liquidity more flexible by increasing the number of entities.
They had access to financing, expanding assets as a guarantee of operations, the deadlines to supply liquidity in the market were increased. On the other hand, worldwide governments established measures in support of the banking sector that sought to facilitate financing and recapitalization, so the guarantees of deposits were expanded, state guarantees were used for credit emissions, as well as public funds by purchasing assets and loans. This capital injection allowed to solve some banks, which in some cases meant the nationalization or the acquisition of assets.
conclusion
Until 2010 these main economies, including Spain, disbursed 1.5 billion dollars for the rescue of entities and the development of global financial system reforms promoted mainly by G-20. Ten years after the beginning of the crisis, its effects in society continue to be perceived, the economic situation in the country has failed Previous levels of the financed crisis will persist economic problems such as income inequality, unemployment rate, among others.
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