...The sub-prime crisis has led to a financial crisis in 2008 to 2009 that impacted many countries around the world. Discuss the causes of the sub-prime crisis and the major parties responsible. Many parties were responsible for the sub-prime crisis during the period of 2008 to 2009. This essay will be discussing the parties responsible for the sub-prime crisis and how the different party’s action causes others to go deeper into the bad situation. Sub-prime is a course of action of borrowers with a defamation or deficient record. Moneylenders will utilize a prestige scoring framework to close which credits a borrower may fit the bill for. Sub-prime credits convey more credit danger, and in that capacity, will convey much higher investment rates also. The US sub-prime home loan emergency was the catalysis of the discriminating emergency and later cause the subsidence that started in 2008. The reason for sub-prime emergency rise up out of sub-prime credits or otherwise called sub-prime home loan, the improvement of this credit began broadening amid the 1990s and such weight is ordinarily seen in programmed auto advances, home value which are lodging credits and home loan giving. Sub-prime credits are higher-danger advances named B to D credits, where D credit being the most noticeably awful credit which brings about a higher investment rate, which additionally mean a higher danger to the banks. Anyhow it appear to be not to be a load issue, from the notion of the finical organization...
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...FINC 6016 Financial Instruments and Markets Final Exam Guide * The final exam for FINC6016 Financial Instruments and Markets will be held on Thursday, November 13, 2014 at 1:50 pm. Please check the location for your specific exam on the Sydney Student section of the University of Sydney website. Note that there are multiple venues for the final exam due to the large class size – you may not have the same room as other students in the class. * The final exam is worth 50% of your total mark for the course. It will last for three hours, plus ten minutes reading time. You are allowed a non-alphanumeric calculator for the exam (which will be checked). Please ensure that you bring your student ID card as well. The formula sheet you will receive is attached to the end of the exam. * The exam consists of two parts * Part A: 45 Multiple Choice Questions, worth a total of 15 marks. These questions cover material from later portion of semester only (since the second multiple choice mid-term examination), but there will be obvious benefits to understanding material from earlier in the course.. * Part B: 5 short-answer questions with multiple parts, worth a total of 35 marks. These cover material mainly from the second half of the course, but an understanding of some parts of the first half of the subject would help (particularly the management of financial institutions, capital accords and the problems with Basel II, and duration gaps, duration measurement...
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...This article was downloaded by: [Loughborough University] On: 26 March 2015, At: 11:27 Publisher: Routledge Informa Ltd Registered in England and Wales Registered Number: 1072954 Registered office: Mortimer House, 37-41 Mortimer Street, London W1T 3JH, UK Public Money & Management Publication details, including instructions for authors and subscription information: http://www.tandfonline.com/loi/rpmm20 How the UK government responded to the fiscal crisis: an outsider's view Walter Kickert Published online: 23 Mar 2012. To cite this article: Walter Kickert (2012) How the UK government responded to the fiscal crisis: an outsider's view, Public Money & Management, 32:3, 169-176, DOI: 10.1080/09540962.2012.676273 To link to this article: http://dx.doi.org/10.1080/09540962.2012.676273 PLEASE SCROLL DOWN FOR ARTICLE Taylor & Francis makes every effort to ensure the accuracy of all the information (the “Content”) contained in the publications on our platform. However, Taylor & Francis, our agents, and our licensors make no representations or warranties whatsoever as to the accuracy, completeness, or suitability for any purpose of the Content. Any opinions and views expressed in this publication are the opinions and views of the authors, and are not the views of or endorsed by Taylor & Francis. The accuracy of the Content should not be relied upon and should be independently verified with primary sources of information. Taylor and Francis shall not be liable...
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...Has banking deregulation contributed to the current economic crisis and if so how? Can advertising (or) marketing (or) public relations help restore trust in the banks? Most of the world has been affected by what has been called the global recession. Banking deregulation is undeniably the main cause of the financial crisis. This essay is going to demonstrate why this is by covering key events, which have lead to the crisis, and highlighting some possible marketing solutions to the trust issue that has resulted from it. The Great Depression in the 1930s provoked the US government to introduce new regulations in order to reform banks and ensure that there would never be another crisis of its type again. These reforms came under the name of the banking act of 1933, commonly referred to as the Glass-Steagle act. Crucially most of the new laws meant that retail and investment banks were to be kept separate and investments could not be made if a return was unlikely. However, over 50 years later these laws became more relaxed as the banks were always pushing to be privatized, as they knew they would be able to make more money (Robert Weissman, 2009). It was then believed that the financial world had changed so much since the Great Depression that the regulatory rules were outdated and that the banks would be able to manage themselves, the decision was also influenced by $300 million of lobbying (PBS, 2003). The Glass-Steagle act was revoked in 1999 by president Clinton, this removed...
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...Financial Crisis and the National Economy PART A Initial balance sheet Liabilities | £m | Assets | £m | Risk Weighting | Risk Adjusted Assets (£m) | Deposits | | Cash | | | | Current accounts | 195 | Cash in Tills | 5 | (0%) | 0 | Time deposits | 94 | Money at call | 5 | (0%) | 0 | | | | | | | Total Liabilities | 289 | Available for sale assets | | | | | Gove' Bonds & Bills | 10 | (10%) | 1 | | | Other Bonds & Bills | 40 | (20%) | 8 | Equity | | | | | | Shareholder Capital | 13 | Other assets | | | | Retained Profits | 3 | Loans and Advances | 125 | (100%) | 125 | | | Mortgages | 120 | (50%) | 60 | Total Equity | 16 | | | | | | | | | | | Total Liabilities + Equity | 305 | Total Assets | 305 | Total Risk Adj’ | 194 | UK Liquidity Ratio | 3.5% | Leverage Ratio | 5.2% | Capital Ratio | 8.2% | Balance sheet after £6m write-down Liabilities | £m | Assets | £m | Risk Weighting | Risk Adjusted Assets (£m) | Deposits | | Cash | | | | Current accounts | 195 | Cash in Tills | 5 | (0%) | 0 | Time deposits | 94 | Money at call | 5 | (0%) | 0 | | | | | | | Total Liabilities | 289 | Available for sale assets | | | | | Gove' Bonds & Bills | 10 | (10%) | 1 | | | Other Bonds & Bills | 40 | (20%) | 8 | Equity | | | | | | Shareholder Capital | 7 | Other assets | | | | Retained Profits | 3 | Loans and Advances |...
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...1. The financial crisis of 2007/2008 and its impact on the UK and other economies Do you still feel vague about the causes and the effects of the financial crisis of 2007/8? Are you preparing for a job interview in either the private or public sector? The events of 2007/8 have shaped both the current UK commercial and business scene and are now having a massive effect on the public sector. Similar impacts are being felt across Europe and the wider world. Knowing a bit more about what happened might give you more confidence going into the interview! This leaflet will give you a basic understanding of the causes of the financial crisis of 2007/2008 and the impact which it had on the UK and other economies. Topics covered are: UK history which led up to the financial crisis The effect on mortgages The banks’ reaction The effect on the world market The effect on the UK market This leaflet concludes with self assessment questions. 1 National and International Issues The financial crisis of 2007/2008 and its impact on the UK and other economies What were the root causes of the crisis? The roots of the financial problems of the last two/three years can probably be traced back to the deregulation of financial markets in the US, the UK and the Western European economies that started in the 1970s and gathered pace in the early 1980s. Deregulation swept away many of the governmental/regulatory controls and freed up organisations to trade across a wider range of...
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...Positive and Negative Effects of the Global Financial Crisis Harlita H. Tomlinson Capella University BMGT8114: Accounting in the Global Era Dr. Wendy Achilles June 8,2014 Table of Contents Abstract 3 Positive and Negative Effects of the Global Financial Crisis 4 Background on the Global Financial Crisis 5 Global Financial Crisis and Its Negative Effects 9 Lack of Financial Sector Regulation and Oversights 9 Increase in the Number of Bankruptcies 11 Global Financial Crisis and Its Positive Effects 12 Designing Regulations to Monitor the Financial Sector 12 Global Governance as a Side Effect of the Global Financial Crisis 13 Lessons Learned 16 Domestic Lessons Learned 16 Global Lessons Learned 17 Lessons from Romania. 18 The Role of Financial Executives in GFC 19 Conclusions 21 References 24 Abstract The first financial crisis of the twenty-first century has not yet ended, according to Gorton and Metrick (2012), the wave of research on the crisis has already exceeded any single reader’s capacity, with the pace of new work only making this task harder. The Global Financial Crisis is considered by many economists to be the worst financial crisis since the Great Depression. Global Financial Crisis resulted in the threat of the total collapse of large financial institutions, the bailout of banks by national governments, and market downturns around the world. In the aftermath of this crisis, the housing market declined significantly and has not...
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...Examine the factors leading to the global financial crisis of 2008/10. Evaluate the impacts of this crisis on EITHER a) a country of your choice OR b) a business of your choice. In this assignment I will be discussing the factors that caused the global financial crisis of 2008/2010 and will be evaluating the impacts of the crisis on the UK economy. Firstly a recession is defined as a period of negative economic growth for two consecutive quarters. This means there is a fall in National Output and National Income. Inevitably a recession will involve higher unemployment and an increase in government borrowing. (Economic help, 2008, www.economicshelp.org, accessed on 24/11/2010) The financial crisis of late was caused by factors including, subprime lending, complex financial systems, greed, high oil prices, globalization and the collapse of the Lehman brothers. All of these factors will be explored throughout. Subprime mortgages are a big factor when talking about the recession, Justin Pritchard states that subprime refers to a borrower that is not prime. These are borrowers who might be less likely to repay a loan and therefore default. Subprime borrowers may be classified as subprime. Banks offered loans to people in the subprime category often putting more interest on the loans as they are a greater risk for the bank however the banks were happy to take on the risk as they could receive a greater interest rate back. These subprime mortgages were to have a big impact on the...
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...BURNING OF FOSSIL FUELS NAME:- NAME OF PROFESSOR:- DATE:- BURNING OF FOSSIL FUELS The burning of fossil fuels is the major contributor to human caused climate change. Once taken out of the ground and burned , coal, oil and gas add to the amount of carbon cycling between the atmosphere and the oceans, soil, rock and vegetation. On human time scales, this transfer is irrevocable, once mined and burned, fossil carbon cannot be locked away safely underground again in the form of new deposits of coal, oil and gas, or in the form of carbonate rock, for millions of years. The transfer is also unsustainable: there is simply not enough “space” in above-ground biological and geological systems to park safely the huge mass of carbon coming out of the ground without carbon dioxide building up catastrophically in both the air and the oceans. At the most fundamental level, therefore, the climate solution revolves around initiating a new pathway away from fossil fuel dependence. Industrialized societies locked in to fossil fuels need to turn to structurally different, non-fossil energy, transport, agricultural and consumption regimes within a few decades to minimize future dangers and costs. Infrastructure, trade, even community structure will have to be reorganized, and state support shifted from fossil-fuelled development toward popular movements constructing or defending low-carbon means of livelihood and social...
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...BURNING OF FOSSIL FUELS NAME:- NAME OF PROFESSOR:- DATE:- BURNING OF FOSSIL FUELS The burning of fossil fuels is the major contributor to human caused climate change. Once taken out of the ground and burned , coal, oil and gas add to the amount of carbon cycling between the atmosphere and the oceans, soil, rock and vegetation. On human time scales, this transfer is irrevocable, once mined and burned, fossil carbon cannot be locked away safely underground again in the form of new deposits of coal, oil and gas, or in the form of carbonate rock, for millions of years. The transfer is also unsustainable: there is simply not enough “space” in above-ground biological and geological systems to park safely the huge mass of carbon coming out of the ground without carbon dioxide building up catastrophically in both the air and the oceans. At the most fundamental level, therefore, the climate solution revolves around initiating a new pathway away from fossil fuel dependence. Industrialized societies locked in to fossil fuels need to turn to structurally different, non-fossil energy, transport, agricultural and consumption regimes within a few decades to minimize future dangers and costs. Infrastructure, trade, even community structure will have to be reorganized, and state support shifted from fossil-fuelled development toward popular movements constructing or defending low-carbon...
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...Global Financial Crisis: The 2007–2012 global financial crisis, also known as the Global Financial Crisis (GFC), late-2000s financial crisis or the second "Great Recession", is considered by many economists to be the worst financial crisis since the Great Depression of the 1930s.[1] It resulted in the collapse of large financial institutions, the bailout of banks by national governments and downturns in stock markets around the world. In many areas, the housing market also suffered, resulting in numerous evictions, foreclosures and prolonged unemployment. It contributed to the failure of key businesses, declines in consumer wealth estimated in trillions of US dollars, and a significant decline in economic activity, leading to a severeglobal economic recession in 2008.[2] The financial crisis was triggered by a complex interplay of valuation and liquidity problems in the United States banking system in 2008.[3][4] The bursting of the U.S. housing bubble, which peaked in 2007, caused the values of securities tied to U.S. real estate pricing to plummet, damaging financial institutions globally.[5][6] Questions regarding bank solvency, declines in credit availability and damaged investor confidence had an impact on global stock markets, where securities suffered large losses during 2008 and early 2009. Economies worldwide slowed during this period, as credit tightened and international trade declined.[7] Governments and central banks responded with unprecedented fiscal stimulus...
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...1 Introduction Banking is an important institution in the economy and plays a very important role in the economic life and economic growth of any society. While it is of common understanding that banking is not “The Economy”, it is agreed that the health of the country’s economy is closely related to the soundness of its banking system which can be sustained through strict regulations and supervision in order to monitor and control business risks such as Capital Risks, Liquidity Risks, Credit Risks, Exchange Risks, Operational Risks, Market Risks and Legal Risks. Bank regulations and bank supervision are required to facilitate a ‘Systematic Risk Reduction’ approach thus reducing the risk of adverse trading conditions and to ensure that Financial Institutions satisfy at least the minimum ‘Prudential’ requirements in order to reduce the risk factor that creditors are exposed to. Lack in regulations and slack in supervision may lead to Financial Institutions risking bankruptcy thus exposing their clients of potentially losing their investments and financial assets while distressing the country’s economy. 2 What is the actual function of a bank within an economy? Banks' traditional role is primarily that of an intermediary for money, i.e. granting loans, processing payments, accepting deposits, carrying out investments, etc... Although banks do not create new wealth, through borrowing, lending and related activities they facilitate...
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...financial crisis • Analyse the role of OTC derivatives in triggering the global financial crisis • Recommend the ways to control the OTC market in the future The origins of the global financial crisis There are several factors causing global financial crisis: 1. Growth of housing bubble & Subprime lending o particular advantage of low long-term interest rates was the US mortgage market. American households traditionally took out fixed-rate mortgages, often guaranteed by the government-sponsored enterprises, the GSEs. As rates fell, households refinanced in large numbers, but this extra origination business dried up once rates started to rise again. Rather than shrink their business, US mortgage lenders pursued riskier segments of the market that the GSEs did not insure, as Graph 4 shows. This included the sub-prime segment, but also so-called ‘Alt-A’ and other non-standard loans involving easier lending terms. At the time, this was considered a positive development, because it was thought that it allowed more people to become home owners. Products requiring low or no deposit, or with a low introductory interest rate were known as ‘affordability products’. They allowed households to pay the very high housing prices that their own stronger demand was generating. o http://www.rba.gov.au/Speeches/2009/_Images/150409_so_graph4.gif o As the US housing boom wore on, lending standards eased further. As Graph 5 shows, up until 2006 the sub-prime market...
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...unemployment, loss of public confidence, domestic and international trade reversal and even capital flight. The regulatory authorities engaged in watching and monitoring health of concerned economies have to proactively respond to mitigate and resolve the crises. There could be different causes for financial crises such as ongoing double digit inflation / uncontrolled monetary expansion, unsustainable internal or external public debt, excessive credit booms, large capital inflows, large current account deficits, balance sheet weaknesses due to maturity mismatches of public debts, fall out of impracticable exchange rate mechanism followed and currency crises (3). The selection of ways and means of mitigating and resolving a financial crisis and accelerating economic recovery is dependent upon root causes leading to financial crises. The policy options selected by regulatory authorities may be debatable. The debate could emanate from objectives of the policy or consequences / results. Object focus debates revolve around reducing the fiscal costs of financial crises or limiting the economic costs or achieving long-term, structural reforms. The result focused debates revolve around restoring the public confidence and economy, restoring growth or achieving of desired restructuring....
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...Table of contents Table of contents 2 Executive Summary 3 I: Key financial trends 4 Global Financial Crisis 4 European Sovereign Debt Crisis 6 Tighter financial regulation 8 II: Impact on entrepreneurial start-ups 9 Investment and valuation decisions 9 References 15 Appendix A: Effects of recession on entrepreneurial start-ups 17 Appendix B: New trend – business incubators 23 Appendix C: Valuation methodology 25 Executive Summary The Global Financial Crisis (GFC) is widely seen as the worst financial crisis since the great depression in the 1930’s. It negatively impacted global financial markets, led to the collapse of major financial institutions, the nationalisation of banks and caused a deep global recession. From its beginnings in the United States, networked financial institutions quickly led to international contagion and the European sovereign debt crisis. In response, the G20 officially endorsed Basel III – a new global standard to reduce systemic risk through stronger capital bases designed to act as a buffer during periods of financial instability and avoid bailouts. Sustained European government efforts to reduce debt through austerity have largely failed, and focus is now shifting to growth strategies. Entrepreneurial start-ups are a key route to driving long-term sustainable growth, but have been hit hard by sluggish consumer demand, tightening credit and scarce, expensive capital. This report discussed some of the implications for both...
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