Please ignore the other comment as it is completely incorrect.
First, we need to understand what a shock is. In economic terms a shock refers to a sudden movement that shifts economic relationships. For example the covid crisis caused a supply shock that suddenly decreased supply of goods. If you are familiar with supply/demand curve, this means a shift in the supply curve. Now a financial shock refers to sudden movements in for example asset prices or borrowing cost.
edit for clarity: shock just refers to a strong, sudden and unexpected movement of curves, it can be both “positive” or “negative” there is no judgement inherent in the term.
“Financial” shock refers to the financial sector of the economy. Think banks, insurance companies, investment folks, etc. Meaning these institutions are getting a shake up and readjusting like the rest of us.
For example: Banks make money by lending money. Now that interest rates are high, people are discouraged from taking loans from a bank. Less credit being lended and less money being made by the bank.
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