Factors Affecting Bank Loan According to Zewdu (2010), the sources of fund for lending are reserve, deposits and capital. All these sources may be affected by different factors and would have a direct influence on lending. Since lending is the principal function of banking industry, the management of banks should give due attention, analyse and take the necessary measures on time on internal and external factors that affect or limit lending. Without lending, banks’ incomes especially interest income would highly deteriorate and affect bank survival. In case, since nonperforming loans (NPLs) has a direct reflection of poor asset quality, the factors that influence banks loans have their own impact on NPLs (Rawlin et al.
Executive Summary Lehman Brothers were an investment bank involved in transactions worth billions of dollars and one of the most powerful investment banks in the world. Lehman Brothers collapsed in 2008 following bad investment in the sub-prime mortgage market and used bad accounting practices called Repo 105 transactions to try and cover up the bad assets. This report sets out the use of the fraud triangle when describing the actions which led to the collapse. The pressure applied on the bank, the opportunity due to the lack of regulation to carry out the actions and the ability of the bank to rationalise their decision making. It shows how the fraud was detected and the accounting practices that were used at the time, how the director
Spain, after the collapse of 2008, saw a rise in the levels of personal debt. Although the public debt stood at 60% of the GDP, the problem was due to foreign exposure of private debt. Spanish banks were relying heavily on whole sale finance from abroad. Portugal had a large current account deficit and external debt which was fuelled by private sector borrowing. Greece, Portugal and Ireland were the worst hit whereas Spain & Italy were considered fiscally vulnerable economies.
As a student of economics, I believe that the repeal of the Glass-Steagall Act via the Gramm-Leach-Bliley Act was not a primary reason behind the Global Financial Crisis 2008; however it did however worsen the situation. The Glass Steagall Act The Glass Steagall Act was initially signed into law in 1933 after the famous stock market crash of 1929. Commercial banks had invested heavily in the stock market and after the crash, a hefty part of the population lost their savings. To prevent something similar from happening again, the Glass Steagall Act was passed. The essence of this act was a complete separation of commercial and investment banking activities.
Sign of rate tampering clearly demonstrated in movements of Credit Default Swap (CDS) prices. The price of CDS includes the risk management against the default. Increases in a firm’s cost of funding in the interbank market, to the extent that they have similar maturities. Different banks failed to keep pace with Certificate of Deposits market increased activity. Questions were raised from market observers.
Aarushi Mehra The Fiscal deficit Of Greece 4.1 THE GREEK DEBT CRISIS: MACROECONOMIC POLICY Macroeconomic policies are explanation to preventing solvency crises in a currency union. The Greek debt crisis occurred in 2009, after the Great Recession: Large government deficits and accumulated debt caused a fiscal crisis that later resulted in bailout packages from the European Central Bank (ECB), the International Monetary Fund (IMF), and the European Commission (EC). When the crisis hit Europe in 2009, the markets were in shock and heavy interest rates were imposed which made it difficult for the debt countries to repay their debts. Large imbalance countries were mostly affected. In the European Union (EU), the pile up of imbalances made the union lose credibility in the financial markets, since these countries couldn’t generate growth by devaluing their currencies.
Introduction The main reason behind the crisis was the consideration that the prices of houses cannot decline that lead to providing mortgage to subprime customers who were not worthy of the loan. As soon as the customers defaulted, the crisis started. According to E&Y report (2012), the impact was so intense that number of IPO’s and the amount of funds exchanged between the financial institutions declines by as much as 50% of the number before the crisis. Even though the financial institutions were in need of money, it was not the right time to raise equity or debt since there was scarcity of capital in the market. Most of the financial institutions had huge funds as bad debt and there were no menders at the time.
This being said the focus was mostly on banks. However, in US the regulation (Dodd-Frank Act) on the other hand the focus was more on non-banking financial institutions and other companies. Bongini and Nieri (2014) point out two important reasons; they already have a criteria for categorizing SIFI, and shadow banking was the reason behind the mortgage crisis. In the first case, any retail bank or group of banks is categorized as SIFI, if its total asset exceeds 50 Billion Dollar, meaning size was used the main criteria in this case. In the second case, the role of the shadow banking which were not properly regulated under the existing financial system was very big in the latest financial crisis, so the authorities were eager to put these organizations under control.
Europe follow the U.S. got in to the economic recession. In Asia, this financial crisis also influenced Japan and China. In this financial crisis, lots of people lost their job, lots of company cannot operate continuous, and government have to inject money to some huge companies to support theirs survive. At this point, some people may say that freedom of trade is not good. As it connected every country together, it would be good for members if the economy is good, and it also would be horrible bad once any economic
Causes of Hyperinflation: Hyperinflation owes its emergence to the certain basic factors, which are stated and illustrated below in brief: The essential explanation behind the development of Hyperinflation in an economy is an immense difference existing in between of demand and supply of a particular sort of money. Such variations ordinarily emerge when almost no certainty is left on that specific money, parallel to a bank run. Such circumstance surfaces because of the accompanying few variables: Sanction of laws connected with real tenders puts a keep an eye on decreasing the value of paper notes, as to hard cash, silver or gold. This is materialized, by initiating forceful acceptance of paper notes, which scarcely have any crucial value. In the event that, the money printing element helps surplus printing, there are possibilities of Hyperinflation to affect the economy.