Financial Crisis


DEFINITION of 'Financial Crisis'

A situation in which the value of financial institutions or assets drops rapidly. A financial crisis is often associated with a panic or a run on the banks, in which investors sell off assets or withdraw money from savings accounts with the expectation that the value of those assets will drop if they remain at a financial institution.

BREAKING DOWN 'Financial Crisis'

A financial crisis can come as a result of institutions or assets being overvalued, and can be exacerbated by investor behavior. A rapid string of sell offs can further result in lower asset prices or more savings withdrawals. If left unchecked, the crisis can cause the economy to go into a recession or depression.

  1. Stock Market Crash

    A rapid and often unanticipated drop in stock prices.
  2. Bubble Theory

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  3. Run

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  4. Recession

    A significant decline in activity across the economy, lasting ...
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    Refers to any of the measures used by stock exchanges during ...
  6. Panic Selling

    Wide-scale selling of an investment, causing a sharp decline ...
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