What is a financial crisis, and how does it affect ordinary people and businesses?
Answer (1)
A financial crisis happens when the financial system of a country or the world becomes unstable. This can be caused by many things—like the collapse of banks, falling stock markets, or a sudden stop in the flow of money and credit. When this happens, it becomes harder for businesses to borrow money, people lose jobs, and the economy slows down.Examples of Financial CrisisOne example is the 2008 financial crisis. It started with banks giving risky loans and ended with some of the biggest companies going bankrupt. People who had savings or investments lost a lot of money. Businesses had to close down or lay off workers because they couldn’t get loans to continue operating. Many families also lost their homes because they couldn’t pay their housing loans.In the Philippines, we did not have a major financial crisis like in the U.S., but we were still affected. Our exports dropped because other countries stopped buying as much. For example, companies that make electronics or garments for export had to reduce their workers. Some OFWs also lost their jobs because businesses abroad were also affected.For ordinary people, a financial crisis means it becomes harder to find work, and prices of goods may increase. Parents may struggle to pay for school fees, and students may need to stop their education temporarily. For businesses, it means less income and more difficulty in getting capital or loans.
