Necessary Banking Changes To Prevent Another Global Financial Crisis

2120 words - 9 pages

Question 1
Financial crisis that affected globally became the greatest shock to the world financial system and financial markets of USA and Europe was mainly affected. Underlying weaknesses in financial regulations were considered as one of causes of Global Financial Crisis. As regulations are blamed in current (2007-2008) crisis it should be taken under consideration that cause lies in Basel I and Basel II. However Basel II was not fully implemented before crisis since it was entered into force in January 2008 in EU and since April 2010 in US. (The de Larosiere Group, 2009). Moreover, if Basel II had fully implemented it could help to prevent the crisis or at least to mitigate it but after cause researches Basel III measures were designed in terms of liquidity, leverage and capital to protect the economy from crisis. Global standards under Basel III must be fully implemented by 2019. Based on “Basel III and related measures by national and supranational regulators will force the banks to save a much bigger capital base – in effect, a foundation stone of solid assets designed to withstand sudden market disruption. In general Basel III will force banks to become smaller relative to the size of their national economies. Lower levels of leverage – the ratio of capital to assets – will become obligatory. And they must have greater stores of spare cash on hand to tide them over temporary difficulties therefore nowadays banking industry is facing challenging times. Regulation is one part but important part is compliance. As per these complex and interrelated challenges will be central to banks’ ability to regain and maintain high performance. “However, believe that for banks and other financial institutions to achieve high performance in coming years, they will need to transform their operations and structures while addressing three significant and inter-related challenges in parallel:
1. Increasing profitability and lifting returns on equity.
2. Simplifying infrastructures that are too complex and costly for current operations.
3. Effectively implementing far-reaching and complex new regulations.

The "to do list" for banks imposes. At least, financial services the companies will need to adjust effective management for the regulatory programs; transformations and alignments of finance and risk of functions; update the current client on - boarding and data collection processes; to establish closer framework for operational risk, and also to develop management plans for crisis. Besides, norms impose the strong efforts directed on control of financial crimes, including anti-money fights and development of decisions on compliance with the Law on the taxation of foreign accounts of compliance (FATCA). They cover expanded structures of the reporting and the new processes of Know Your Client (KC), and will demand the considerable volume of investment and resources for both American and non...

Find Another Essay On Necessary Banking Changes to Prevent Another Global Financial Crisis

The Global Financial Crisis Essay

618 words - 2 pages the worst financial crisis since the Great Depression of 1930. Called “Occupy Wall Street”, the movement drew the attention of the media the world over. But what are the causes of the global financial crisis? How did we, or our governments, let it happen? The protesters seem to have found an answer. They blame but one thing: greed. According to protesters in London, it is the fault of the banking industry. Worse yet they blame their government

The Global Financial Crisis Essay

1000 words - 4 pages The global financial crisis has brought wide-ranging changes to consumer spending behaviour and consumption patterns throughout the world with the economic downturn impacting on the spending and purchasing power of people. The findings of a study conducted by Booz and Company in 2008 on consumer spending behaviour revealed that, firstly, the unprecedented confluence of the dramatic rise in oil prices, the substantial deterioration of housing

Global Financial Crisis

2164 words - 9 pages The Global Financial Crisis that occurred in 2008 and crippled every major economy was not an accident; it was caused by an unregulated and uncontrolled financial industry. Decline of Real Estate Value The financial crisis is considered to have its roots in the United States where there was an increase in loan losses for subprimes. Banks were lending money to people that did not have the capability to maintain a regular repayment schedule

Banking Bonuses and the Financial Crisis

2780 words - 11 pages . This started the credit crunch, insolvency risks in banks & lead to global crisis in Ireland and other countries with collapse in US of major banks that were historically untouchable & would never fail, but they did fail such as Lehman Brothers sent shock waves through international financial markets. 1. Bonus system in banks started these risk investments that went bad & took down some of the biggest financial institutions in the world. 2

What caused the Global Financial Crisis (GFC)?

2212 words - 9 pages What caused the Global Financial Crisis (GFC)? This was the first global financial crisis since the Great Depression of the 1930s; it spread at an un-parallel rate across the world (Claessens et al, 2013). In the aftermath of the Great Depression it was universally believed by economists that the unregulated financial markets were to blame as they were fundamentally unstable, subject to manipulation by bankers, and capable of triggering deep

The Global Financial Crisis and Its Impact

2217 words - 9 pages 1.0 The Global Financial Crisis and Its Impact The recent Global Financial Crisis (GFC) initially began with the collapse of credits and financial markets, which caused by the sub-prime mortgage crisis in the US in 2007. The sub-prime mortgages were given to high-risk lenders (with bad credit history) who were in danger of defaulting, which eventually caused a global credit crunch, where the banks were unwilling to lend to each other. In

The Need for Appropriate Government Response to the Global Financial Crisis

1439 words - 6 pages Economists called the recent Global Financial Crisis the worst financial crisis since the Stock Market Crash of 1929 and the Great Depression. The United States of America are in a time of recession and increasing numbers of people are finding themselves in need of assistance. Low-income individuals and families are suffering as hours are cut, benefits shrink, and programs they depend on disappear due to state budget cuts. It is imperative

The Global Financial Crisis and The Regulation of Investment Banks

1271 words - 6 pages country scale in order to reduce the level of exposure to such events. For example, Basel II was enacted to guide the banks on the amount of the capital they should hold. Following the global financial crisis, it has been very important to continue implementing necessary changes within the global corporate and investment banking industry. Thus there has been a huge effort towards the general banking reform and in particular reforms pertaining the

The Problem with Banks and the Global Financial Crisis 2008

1128 words - 5 pages crisis have two things in common: high unemployment and high indebtedness. Today, the Global Financial crisis resulted in the loss of people’s savings and homes, leaving them unable to pay back their debt. The global financial crisis has devastating effects worldwide and is still present nowadays. In order to recover the economy, banks and the government have take actions to overcome the financial crisis and to prevent another one from

The contemporary Great Recession and the global financial crisis

953 words - 4 pages Since the advent of the subprime crisis in 2007 that it is commonly believed to have led to the Great recession and to the present global financial crisis, these issues have been subject to much research. In fact, no one can claim that the Great Recession and the global financial crisis have been under-researched. In fact, the new world recession has been analysed from different angles and perspectives. Historians, economists, financial experts

The Fiscal Constitutionalism Theory facing the Global Financial Crisis

648 words - 3 pages Constitution process on one side and partially to the growing mutual consensus of the left and right parties towards limiting the loss of sovereignty. Otherwise the recent financial crisis had gave momentum to the academical debate towards the means to counter-act the lack of growth of some MS and the growing costs due to the welfare spending. The relationship between the recent crisis and the constitutions in this work follows two lines. The first

Similar Essays

Impact Of Global Financial Crisis On Banking Sector

1904 words - 8 pages different customers. In this paper, I am going to investigate about the level of efficiency of the Islamic and conventional commercial banks before and after the Global Financial Crisis. Islamic banking system has holds the six principles for their operation system which is (1) money as capital, (2) Rabbulmal and Mudarib relationships, (3) risk sharing (4) markets set prices and generate profits, (5) Islamic banking stability and (6) Islamic banks as

Impact Of Global Financial Crisis On Banking Sector

2820 words - 11 pages is in the range of 2003 until 2012. The main reason of selecting this time frame because Global Financial Crisis is happened in 2007 and the range of the period can be used to make comparison of the performance of the bank before and after the crisis. In this study, cross sectional data will be used. The secondary data will be obtained by collecting the annual report from each of the bank through Bursa Malaysia or their bank’s website. The

The Global Financial Crisis Essay

2812 words - 11 pages sellers have asymmetric in order. The strength of the financial structure is one of the major concerns of the central banks as the latest global financial crisis illustrate, financial system disruption can activate a pointed reduction in economic movement, damage the communication of monetary policy and weaken the well-organized portion of capital. The bad products or service are additional probable to be chosen. In adverse selection when bank

Global Financial Crisis Essay

831 words - 4 pages There is no smoke without fire. The global financial crisis caused from hundreds of thousands of decisions and changes from different areas. The America government, Wall Street and the Rating Agencies put on this world-shaking show together. And to be more specific, the top officials in politics and finance pull strings behind the senses. Applying Mintzberg’s ten management roles model as a frame, the America government, Wall Street and the