The tendency for a financial crisis to spread to other countries in the region is known as:
A) moral hazard.
B) financial contagion.
C) Asian flu.
D) ripple theory.
E) panic.

Question

Quizplus · Accepted Answer

Financial contagion refers to the spread of market disturbances – mostly on the downside – from one country to the other, a process observed through the co-movements in exchange rates, stock prices, sovereign spreads, and capital flows.

The Tendency for a Financial Crisis to Spread to Other