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Post-2008 Economic and Financial Realities

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Given the new economic and market realities prevailing since the 2008 great recession, first list and then explain in detail four behavioral finance lessons that can be of value to anyone going forward in life. You may answer this question from the perspective of your own personal life as an individual, or the perspective of your work, or both. Make sure you answer this question in light of the post-2008 economic and financial realities. Don't be afraid to 'take risks' in answering this question.

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BEHAVIORAL FINANCE
Given the new economic and market realities prevailing since the 2008 great recession, first list, and then explain in needed details four (4) Behavioral Finance lessons that can be of value to anyone going forward in life. You may answer this question from the perspective of your own personal life as an individual, or the perspective of your work, or both. Make sure you answer this question in light of the post-2008 economic and financial realities.

Recession is a period characterized by a significant decline in economic activity across a given economy. This would mean a slowdown in economic activity. It is marked by increasing unemployment, falling industrial production, declining real income, and shrinking wholesale and retail trade (Hirschey, 2003). Increasing unemployment means decreasing source of income of people, followed by a decrease in disposable income which is that part of the personal income that is supposed to be divided between consumption and savings.
Declining real income means decrease in the purchasing power of money. As a result of continuous increase in prices of goods and services, the amount of goods that a dollar is capable of buying becomes lesser.
Other economic implications of recession include the following:
1. The government may resort to inflationary monetary policies. This means expansion of credit throughout the economy.
2. Low interest rates resulting from expansionary credit environment. Because of low interest rates, unproductive investments and high-risk activities occur in the economy.
3. Because of an excess creation ...

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Elisa Valdez, PhD
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  • Bachelor of Science in Business Administration, University of the Philippines
  • Master in Business Administration, Saint Mary's University
  • Doctor of Philosophy in Education, University of the Philippines
  • Doctor in Business Adminstration (IP), Polytechnic University of the Philippines
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