Home » Financial Crisis vs. Economic Crisis: One Minute Explanation/Comparison (Definition, Examples, etc.) financial crisis

Financial Crisis vs. Economic Crisis: One Minute Explanation/Comparison (Definition, Examples, etc.) financial crisis



A lot of people tend to use the terms “financial crisis” and “economic crisis” as if they are interchangeable but… well, they’re not. As a general rule, think of an economic crisis as a broader description, one that encompasses the economy as a whole with its numerous sectors: from manufacturing to, yes, the financial industry.

In contrast, we have a financial crisis which, as the name suggests, affects the financial sector exclusively and therein lies the nuance one needs to understand: while either can cause the other (as explained in this video), the general rule is that economic crisis represents the broader term.

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The comparison becomes easy enough to understand if we start using examples.

As an example of a financial crisis which ultimately generated an economic one, we have the (in)famous Great Recession and as an example of an economic crisis which ended up causing significant enough damage to also bring about a financial one, we have 2020’s developments.

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Again, comparing them isn’t the least bit difficult and through this video, I’ve done just that… from definition to examples 🙂

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Financial Crisis vs. Economic Crisis: One Minute Explanation/Comparison (Definition, Examples, etc.)

Financial Crisis vs. Economic Crisis: One Minute Explanation/Comparison (Definition, Examples, etc.)

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Financial Crisis vs. Economic Crisis: One Minute Explanation/Comparison (Definition, Examples, etc.)
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11 thoughts on “Financial Crisis vs. Economic Crisis: One Minute Explanation/Comparison (Definition, Examples, etc.) financial crisis”

  1. Can someone please make me understand. Why are financial markets so IMPORTANT and why does everyone panic when they're falling, why does it matter. Example, the Dow Jones has fallen recently and it's all over the news. Who loses/makes money.
    And also for single stocks, why do we care when they drop drastically. Why does the underlying company panic? I can't seem to find answers. Thanks you in advance

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