What are the Consequences of Financial Contagion for Businesses?
Businesses can face several challenges due to financial contagion:
1. Decline in Stock Prices: As financial markets react to contagion, stock prices can plummet, reducing the market value of companies.
2. Credit Crunch: Financial contagion can lead to tighter credit conditions, making it difficult for businesses to secure loans or financing.
3. Operational Disruptions: Companies with global operations might experience disruptions in their supply chain or sales due to economic slowdowns in affected regions.
4. Currency Fluctuations: Exchange rates can become volatile during periods of financial contagion, impacting businesses involved in international trade.