The Impact of Recent Global Financial Crisis on the Financial Institutions in the Developing Countries : Global Perspectives

The purpose of this paper is to examine the recent impact of financial crisis on the financial institutions in the developing countries. This study contributes to the knowledge of investors and market practitioners to be well aware of the risks attached with investments in developing countries. The global financial crisis set off by the sub-prime credit crisis in the US. This has destabilized the financial markets of the developed world causing the fall down of prominent names in the banking business. Primary cause of this crisis can be Banks and other financial institutions in the United States of America have gone through a long period of inappropriate lending. Another cause of this crisis as according to latest studies may be the effect of the global financial crisis was worsened by rising global energy and commodity prices which pushed up inflation. Developing countries have mainly faced strong rises in prices. In order to study the impact of this financial crisis content analysis of various articles and research papers related to development literature was carried out. Our findings are in line with the previous research done by Eichengreen et al., (2008) and Yifu Lin (2008) which support the fact that the Banks in the developing economies will see their credit lines from foreign banks squeezed and the increasing financial flows that these economies have been experiencing are going to