Analysis of Different Phenomena in Financial Cycles

Abstract

This paper investigates the phenomenon of financial cycles, charting their history from the early modern period to the present. Financial cycles are repeating patterns of credit and investment expansion and recession. It has also had a huge impact on the economic histories of numerous countries. This essay begins by defining financial cycles and offering an outline of some of the important cycles that have happened throughout history, such as the subprime mortgage crisis and the East India Company. The essay then delves into the relationship between credit and financial cycles, suggesting that credit booms can fuel economic expansion and asset bubbles while simultaneously causing social instability and catastrophes. The paper also explores the influence of financial cycles on different countries, concentrating on the experiences of 18th-century Europe, as well as the United States and China in recent years. The article illustrates via these case studies that financial cycles may have deep and long-lasting consequences on economies and that understanding their dynamics is critical for policymakers and investors alike.