Recovery of Financial Markets and Institutions and Challenges in the Essay

Recovery of Financial Markets and Institutions and Challenges in the Post-Crisis Era - Essay Example According to the World Investment Report 2010 presented by United Nations Conference on Trade and Development, the world economies have recovered from the global financial crisis (UNCTAD, 2010). The aim of this report is to study the recovery of financial markets and institutions and challenges which these institutions are facing in the post-crisis era. In this research essay, the impact of financial crisis on three major stock markets of the world including FTSE-100, NIKKEE and DOW has been studied. Moreover, the underlying factors contributing to the downturn of the stock markets have also been discussed. The report also highlights the recovery process and the performance of the stocks in the post-crisis era. In this report, the prospects of financial regulatory reforms and financial sector and economic growth have been discussed. Finally, the new trends on the financial landscape and changes in institutions have been discussed.... The index started declining around the mid of 2008 and in the first quarter of 2009 the index reached to its lowest level in the history. Figure II: DOW Index Historical Performance of Five Years The following chart shows the NIKKIE 225 Index performance from 2007 to 2011. The table shows that the stock points declined very sharply at the end of year 2008 when stock markets were facing a huge impact of financial crisis. The index started declining around the mid of 2008 and in the first quarter of 2009 the index reached to its lowest level in the history. Figure III: NIKKIE Index Historical Performance of Five Years Underlying Factors Contributed to the Decline of Stock Markets The global financial markets are strongly integrated markets thanks to the rapid process of globalisation. One of the major factors that lead to the current financial crisis is the real estate bubble. Actually 80 percent of the U.S. market is securitised because excess capital globally has been pushed into the U.S. mortgage market (Stock Market Investors). Before the financial crisis, the world was facing the greatest expansion of leveraged debt and greatest explosion in the prices of the equity markets. All kinds of financial markets such as NASDAQ 100, Platinum futures, oil prices or gold stocks, started demonstrating the power of trend-following crows on the up and down sides of the markets and in this way the four-hundred years of market history destructed and with the unwinding of leveraged debt, the prices and confidence of investors destroyed (Wakefield, 2008). The financial crisis penetrated into the world’s stock markets because stock market is one of the major activities in the corporate world. Dash & Mallick explain that the indices of the stock markets