What is a financial infection?

Financial infection concerns the declining state of one financial institution or market that causes similar negative effects in unrelated institutions or markets. This phenomenon is often compared with the spread of the disease because it seems to be "caught" by other entities such as the disease. It was only since the turn of the century that the heterogeneous financial conditions in terms of infection have been analyzed instead of isolated. It is easier to try to prove the relationship of consecutive financial impacts at domestic and international level with the world than ever for theorists. For example, in 2010, in 2010, she was considered a financial crisis in Greece, where a country was needed to strengthen the country that had a contagious impact on the US real estate market. Analysts have created a combination of the limit of the crisis undermining investors' confidence and led to the recruiting of investment in American treasures that are considered the safest form of investment around the world. As mortgage interest rates in the US are tied to the Treasury Rates,The impact of increasing investment in this type of security was reported to have ripples on the sale of real estate.

Financial infection is also analyzed in the domestic context. For example, the banking crisis in the mid -1920s began in the US by failing one major investment bank. Then the banks fell into the default settings as Domino until the government entered the rescue package. Until then, however, the financial crisis seemed to have spread to Great Britain and other countries. The reciprocity of world markets means that no financial crisis can necessarily be limited to its own country or industry.

There is a series of economic theory that seeks to explain the basis of the phenomenon of financial infection. Some think the dependence of different currencies or links between financial institutions controls the infection. Others focus on the interdependence of cross -border markets to explain after each other. One of the approach to a healthyReason is to look at the psychology of a person that causes people to respond for fear and create the momentum of transactions that cannot be stopped by public assurances.

The concept of financial infections caused governments to introduce controls to alleviate effect. Banking deposits are an example of a government attempt to prevent the customer from running on banks that could result from the failure of one bank. Financial regulations for control of pollution of the entire sector were also introduced by determining checks and balances to prevent failure. These types of governments are to maintain the basic objective of public confidence in the financial institution AA economics.