The role of stock markets in the running of every economy is massive; therefore, an insatiable desire to delve into the Nitti gritty of understanding the impacts of other factors that impact on the macroeconomics is enormous. In the full understanding of the economic stability factors attributed to both micro and macroeconomic elements of each country. Such extra factors are as discussed below.
Failures of the Banks
Banks play a central role in the economic stability of every country. The insurances of bank finances are needed to ensure that there is no total collapse of the vital institutions. Banks offer loans and grants to individuals and companies. Such endowments are invested in a way that ensures that there is continuity in the economic operation of every element of the economy. The interest rates charged by the bank may encourage or discourage borrowing. In this regard, there is need to limit banks failures, given its central role in the rollout of the fiscal, economic policies.
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Reduction in Purchasing Power
The crash of stocks markets operation has a devastating impact on the smoothening of the macroeconomic activities globally. In line with the decline in borrowing and exchanges, there is a consequential reduction in their purchasing power. These powers, when limited subsequently means there are limited trade fairs that keep the economy on the roll. In the full glare of such massive factors, it is imperative upon every individual to realize that the government intervention to stabilize the exchange market.
Climatic factors
The climatic factors such as drought may have a devastating impact on the exportation of agricultural products. With the determination and acknowledgment of the critical agriculture play in the economic set-up of every economy, drought may lead to a massive decline in the production of agricultural products, thus reduced earning to the producers. Such climatic factors, however minimal may just land the entire economy into shambles and eventual collapse.
