Answer to Question #309495 in Finance for Comfort

Question

How did systemic risk contributed to the financial crisis of 2008?

Answer 1

Systematic risk is a risk that causes the economy to be unstable and it results from economical, political, and social factors which cannot be controlled.

Systematic risk was considered to be a major contributor to the 2008 financial crisis.

In 2008 there was an increase in systematic risk which resulted from banks borrowing huge amounts of money so as to help them sustain their balance sheets.