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The global financial crisis in 2008 is considered to be the most serious worldwide financial crisis, which started with the sub-prime lending crisis in USA in 2007. The sub-prime lending crisis led to the banking crisis in 2008 with the collapse of Lehman Brothers in 2008. The sub-prime lending refers to the provision of loans to those borrowers who may have difficulties in repaying loans, and it arises because of excess liquidity following the East Asian crisis. Which one of the following sequences shows the correct precedence as per the given passage?

The global financial crisis in 2008 is considered to be the most serious worldwide financial crisis, which started with the sub-prime lending crisis in USA in 2007. The sub-prime lending crisis led to the banking crisis in 2008 with the collapse of Lehman Brothers in 2008. The sub-prime lending refers to the provision of loans to those borrowers who may have difficulties in repaying loans, and it arises because of excess liquidity following the East Asian crisis. Which one of the following sequences shows the correct precedence as per the given passage? Correct Answer East Asian crisis →  subprime lending crisis → banking crisis → global financial crisis. 

The correct answer is option 1) i.e.East Asian crisis →  subprime lending crisis → banking crisis → global financial crisis.

After reading the passage and going through the options (cursory look), we can easily comprehend that we need to select the precedence order on the basis of time( the event that happened first will be on the leftmost side). Let's see the following lines given in the passage "The global financial crisis in 2008 is considered to be the most serious worldwide financial crisis,", so it is clear that 'global financial crisis' is the final result that occurred because of some series of event that took place in the past. Let's connect these chain of events- Excess liquidity resulted in East Asian crises and to compensate this crisis 'sub-prime lending' came into play (provision of loans to those borrowers who may have difficulties in repaying loans), the sub-prime lending crisis led to the banking crisis in 2008 with the collapse of Lehman Brothers in 2008, finally all this resulted in the global financial crisis.

Related Questions

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How does shadow banking differ from commercial banking?
1. While commercial banks are tightly regulated, shadow banking is not well regulated.
2. Shadow banking cannot create money.
3. While liabilities of commercial banks are insured, shadow banking liabilities are not insured.
4. While commercial banks access to central bank liquidity in the times of distress, shadow banking does not have such resource.
Select the correct answer:
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Seringalistas refers to
In the following passage, some of the words have been left out. Read the passage carefully and select the correct answer for the given blank out of the four alternatives.
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Which of the following are the characteristic of a financial intermediary?
1. It introduces borrowers to lenders.
2. It has assets which exceed liabilities.
3. It increases liquidity for lenders.
4. It reduces transaction costs for borrowers and lenders.
5. It makes excess profit.
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