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    Financial Crisis

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     What is financial crisis  The nature and types of financial crisis  Examples of financial crisis which had an impact on Sri Lankan economy  Impact or consequences of financial crisis  Strategies to overcome financial crisis

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    Financial Crisis

    Uploaded by

    nuwan tharaka
    374 views25 pages
     What is financial crisis  The nature and types of financial crisis  Examples of financial crisis which had an impact on Sri Lankan economy  Impact or consequences of financial crisis  Strategies to overcome financial crisis

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     What is financial crisis  The nature and types of financial crisis  Examples of financial crisis which had an impact on Sri Lankan economy  Impact or consequences of financial crisis  Strategies to overcome financial crisis

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    374 views25 pages

    Financial Crisis

    Uploaded by

    nuwan tharaka
     What is financial crisis  The nature and types of financial crisis  Examples of financial crisis which had an impact on Sri Lankan economy  Impact or consequences of financial crisis  Strategies to overcome financial crisis

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 25

    Analyze the impact of Financial

    Crisis on Sri Lankan Economy

    Nilmini Rajapaksha Yapa (Graduate Student)


    Financial Accounting
    National Institute of Business Management (NIBM)
    Content
    ➢ What is financial crisis
    ➢ The nature and types of financial crisis
    ➢ Examples of financial crisis which had an impact on Sri Lankan
    economy
    ➢ Impact or consequences of financial crisis
    ➢ Strategies to overcome financial crisis

    2
    What is financial crisis ?
    The nature and types of Financial
    Crisis
    The Nature of Financial crisis

    ▸ In the 19th and 20th centuries many financial crisis were


    associated with banking panics.

    ▸ Financial crisis are often preceded by asset and credit


    booms that eventually turn in to busts.

    5
    Type of Financial crisis

    6
    1. Currency crisis
    ➢ In a general, a currency crisis can be define as a situation, when
    the participants in an exchange market come to recognize that a
    pegged exchange rate is about to fail.

    2. Banking crisis
    ➢ Example of the bank runs include the run on the bank of the united
    states in 1931 and the run on Northern Rock in 2007.

    3. International financial crisis


    ➢ When a country that maintain a fixed exchange rate is suddenly
    force to devalue. This is called a currency crisis or balance of
    payment crisis.
    7
    Examples of financial crisis which had
    an impact on Sri Lankan Economy
    ➢ In the recent past there have been
    many financial crises. The causes of
    these financial crises are different.

    9
    The US Sub-prime Mortgage Crisis

    ➢ The US sub-prime mortgage crisis was one of


    the worst hit and recent financial crises. The
    crisis began with the bursting of the United
    States’ housing bubble and high default rates
    on “sub-prime” and adjustable rate mortgages

    10
    Easter Sunday Attack

    ➢ Shocks from deadly suicide bombings on Easter


    Sunday in Sri Lanka are reverberating through
    out its economy in the worst crisis since the
    South Asian island nation’s civil war ended in
    2009

    11
    Impact or consequences of
    financial crisis
    ▸ US Financial Crisis and the Sri Lankan Economy

    ▸ Easter attack & Sri Lanka’s deep economic


    crisis

    13
    US Financial Crisis and the Sri Lankan Economy

    Reasons :
    ▸ Funds invested by Foreigners in Treasury Bonds & Bills flowed out from
    Sri Lanka.
    ▸ The Sri Lankan Nationals who have migrated abroad for employment
    couldn't send their valuable foreign currency.
    ▸ The export of Tea, Rubber, Coconut, Spices, Jewellery, Garments have
    badly affected.

    14
    Exports Declined :

    ▸ There was decline in exports such as Tea & Rubber.

    ▸ Decline in growth of Textile & Leather In 2007 7.3% but


    In 2008 3.1% slow growth.

    ▸ Exports of Gems & Jewellery also affected.

    15
    Economic Growth :

    ▸ The lowest economic growth of 1.6 % in the first quarter 2009


    indicated the adverse effects of the global crisis on the Sri
    Lanka economy.

    ▸ Economic growth in 2009 was 3.5 % compared to 6% in 2008


    which showed the adverse impact of the financial crisis on
    the Sri Lankan economy.

    16
    Unemployment
    ▸ The service sector growth in 2007 7.1% but in 2008 5.6%

    Inflation
    ▸ The average inflation in 2009 was 3.4% the lowest since
    1985.

    17
    Tourism Sector

    ▸ Tourism arrival dropped by 11.2% in 2008 partly due to the


    global crisis.

    ▸ The tourist arrivals from the Western Europe & North


    American countries dropped by 15% in 2008 when
    compared to 2007.

    18
    Easter attack & Sri Lanka’s deep
    economic crisis

    ▸ Prior to the April 21st Easter attack, international


    rating agencies predicted that Sri Lanka’ s GDP
    growth rate that year would be 3.4 percent

    19
    ▸ The turmoil led to a downgrade in the country’s sovereign debt rating
    and the currency tumbled 16 per cent against the US dollar.

    ▸ Foreign reserves slipped below the amount needed to pay for four
    months of imports.

    ▸ Tourism contributes 5 percent of the country’s GDP. Before the attacks,


    tourism earnings were expected to rise from US $ 4 billion last year to
    $5 billion in 2019. This has been revised down to $3.5 billion.

    ▸ International credit rating agency Moody’s reduced its prediction for this
    year to 2.6 percent.

    20
    Strategies to overcome Financial
    crisis
    For a country has main four options for
    getting out of Financial crisis

    ▸ Devalue
    ▸ Inflate
    ▸ Default
    ▸ Deflate
    22
    Conclusion

    we can't completely avoid the Financial Crisis,


    but through the continuous implementation of
    appropriate polices we can avoid the adverse
    impacts.

    23
    Any questions?

    24
    THANK YOU!

    25

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