The term
financial crisis is applied broadly to a variety of situations in which some financial assets suddenly lose a large part of their nominal value. In the 19th and early 20th centuries, many financial crises were associated with
banking panics, and many
recessions coincided with these panics. Other situations that are often called financial crises include
stock market crashes and the
bursting of other financial
bubbles,
currency crises, and
sovereign defaults. Financial crises directly result in a loss of
paper wealth but do not necessarily result in changes in the real economy.