are currently facing. But it has been argued by several observers that the business schools have failed to provide preventive measures for current global financial crises. These observers have argued that lack of relevance of these business schools, showing unethical behaviour of these business schools and creating negative impacts on the people and firms or business organisations are creating barriers for providing preventive measures in favour of prevention of current financial crises. Many observers have argued that managers after getting passed out from the best business schools do the same job in banking sectors or in the share markets which can be done by people having no background of studying in business schools (Canals, 2009, pp. 42-43).
These managers are adding nothing new in these sectors. Business schools bear a certain responsibility for (not preventing) the current financial crisis. Nature of current financial crises: Almost all the economies of the world are facing problems in regard to their economic growth process due to the prevalence of financial crises that these economies are facing mainly since 2006-07. These economies are getting worse off in terms of putting impetus in their economic growth paths and also in terms of creating positive impacts of monetary and fiscal policies which policymakers of these countries are taking.
Current financial crises are creating adverse effects on the purchasing power of global and local consumers. Prices of necessary goods and services are increasing at rapid speed and global organisations are increasingly cutting off their labour force. These are resulting in further decline in global income and hence decline in people’s purchasing power. According to many researchers, including Noble laureate Paul Krugman, these global financial crises are results of poor and ineffective banking and financial system of the developed economies of the world like European economies and mainly American economy.
According to Paul Krugman the banking and financial system of these economies has been largely dependent upon the free market forces. These banking and financial systems had no control over the funds or assets which are circulating in the global economy. They became more and more concerned about creating new funds and hence they have started to provide more and more loans to people and business organisations.
But when one defaulter defaults to pay his loan, the entire system collapsed due to the fact that the structure of providing loans was dependent on multiple layers.
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