Explain why the 2007-08 financial crises caused concerns about systemic risk.

        According to the history, after the 1930s the financial crisis that hits in 2007-8 are regarded as the most serious financial crisis that left every lasting impact on the financial institutions. Likewise, the financial crisis of 2007-08 is also regarded as a major cause of the systematic risk. Systematic risk is a term used in finance, which represents the risk that is expected to collapse the entire system or market, which is opposite to the risk of collapse to a single entity system or a group [9]. Likewise, it happened in 2007 when the entire financial market collapsed. The financial crisis caused the systematic risk because as the financial crises starts the bank consumers and even shareholders becomes worry about their investment and by foreseen the coming crisis, they focused on to save their capital. In opt to avoid the impact of the crisis, the investors, the consumers and the shareholders all went to withdraw their investment, that make the situation more critical for the financial institution and their financial burden became more critical with double loss that caused systematic risk.

        Likewise, in the 2007-08 economic crisis, the uncertain situation set that put everyone into great worry. People started to withdraw their investment from the banks another financial institutions that put more burdens on the economic condition of the country. Due to this practice, the money circulation decreased in the market and at the same time, the banks become empty as they do not have money do to which the entire economic market starts to collapse due to the inefficiency circulation of the money. On the other hand, the interests rates were also increased due to which the investors were not purchasing in the market and the market badly collapsed. Subsequently, in 2007, it can be seen that the financial risk became severe with the external factors for the business and this affects the entire market rather than influencing a specific business. Usually the systematic risk is uncontrollable for an individual entity as it causes due to the multiple factors that are a combination of the internal and external factors. The systematic risk also associated with the securities such as social, economic, legal and economic.

References of financial crises caused concerns about systemic risk.