The post-Bretton Woods era shows a tremendous explosion in the global capital mobility, financial innovation and global lending that challenges the state boundaries and promoted globalization. The trade activities are expanded during that period and developments in the global finance rearrange relations in the state-society and shift Keynesian economic towards the neoliberal policies. The prospects for societies and governments that get right policies are favourable, and those societies and government that manage their political economies inefficiently can face harsh disciplines. There is a shift towards an international political, economic system which increases the probability of greater differences between those who can participate in the global finance and who cannot. The following circumstances add to the uncertainty about how the national political economies are interconnected. Both bad and good effects are not understood completely, and consequently, it is difficult to manage and mitigate the situation. The government implements rules and regulations to control the situation. The fluctuations in the market depend on many factors. The main factor for the increase or decrease in the stock prices is the behaviour of the investors.
A bubble occurs in the stock market when the investors increase their demand for a particular stock. The increase in demand leads to the increase in the price of the stock above its actual value. When the investor in the market realizes that the prices of shares have increased far beyond the asset value, they start withdrawing their money. Crashes in the market can be linked to either log periodic law bubble or an external shock. The efficient market hypothesis can be affected depending on the fluctuations in the market. The prices of the stocks decrease with the decrease in the demand for the stocks in the market. The performance of stock market depends on the demand of the stock in the market (Blakey, 2008). In history, major stock markets have experienced crashes. Bubbles form in securities, economies, business sectors and stock markets because of the change in the behaviour of the investors. In the 1980s, bubbles occurred in the economy of Japan when banks were deregulated partially. In the late 1990s, the dot-com boom happened that affected the stock market in which people purchased stocks at high prices. They purchase the stocks with the view of selling it at a high price in future which leads to a huge market crash. The resources are transferred in the areas of rapid development when bubbles occur in markets, equities and economies.