A financial crisis is a situation where the value of financial institutions or assets drops rapidly, leading to a loss of confidence among investors and consumers. This can result in bank failures, stock market crashes, and a decline in economic activity. Common causes include excessive debt, poor financial regulation, and economic shocks. During a financial crisis, governments and central banks often intervene to stabilize the economy. They may implement measures such as bailouts for struggling banks, interest rate cuts, or stimulus packages to encourage spending. The effects can be long-lasting, impacting employment and economic growth for years.