Thesis on financial crisis

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  1. Two essays on financial crisis and banking
  2. Open Access Repository
  3. Pick Great MBA Dissertation Topics About The Recession

Following the collapse of housing bubble in early , prices of essential commodities increased.


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The increase in commodity prices was one of the very many consequences of the housing bubble burst. The housing bubble, according to economists, was very stressful to the household economy and the banking institutions at large. Consumption of certain commodities was either regulated or cut off to increase on savings and carter for the other basic needs.

To prove this, it is on record that the price of oil was approximately three times the initial price. There was speculation that money was flowing from the household finances into commodities. The financial institutions were also blamed for the increased commodity prices.

There existed an acute shortage of raw materials and hence increasing the cost of production. This scenario subsequently raised the prices of essential commodities. The raw material crisis was somehow contributed by the Chinese dominance in Africa and the other potential states in the world. The soaring prices of oil directly affect the arithmetic involved in consumer spending.

Most often, production cost is transferred to the consumers who are required to spend more on gasoline and gas than on the other essential commodities. During the financial crisis, house bubble was part and parcel of all these occurrences and hence its exacerbation as a result. The pending issues were not solved in accordance with the economic situation due to the surging oil prices. The oil producing countries were the main beneficiaries of this scheme as they ended up accumulating most of the wealth.

Apparently, the oil importing countries had to spend more in purchasing the oil and hence the cost of commodity production in the respective states increased. The consumers were the main sufferers because they had to redirect finances from other avenues to settle the commodity bills. Copper and Nickel prices also went high prior to the crisis. Without any doubt, it is evident that the effects of the price instabilities and price variations contributed to the financial crisis.

Two essays on financial crisis and banking

Economists are the principle advisors whenever economic issues such as depression, recession and stability are concerned. They are required to analyze the past financial crisis and should be responsible for forecasting any impending economic crisis. They are also required to advice the ordinary people, stakeholders and financial institutions on economic trends, future crises and the mitigation measures of mitigating them.

An unfortunate occurrence took place prior to the eruption of the financial crisis. The crisis was not predicted by the mainstream economists in the United States. However, it is rife that several heterodox economics had a feeling of the occurrence of the crisis but there was an argument of misunderstanding between them. They had varying arguments on the estimating of the appropriate time of the crisis.

Only 12 of the economists managed to predict the crisis. Schools and other economic institutions also predicted the crisis. The schools based their predictions on observing the effects of artificial and laxity in the supply of money. There were several articles including the New York Times and other university journals that had a revelation of the occurrence of the global financial crisis. The financial crisis impacted negatively on financial markets. Since the financial markets greatly affect the economy, various stakes were upheld and hence the stress on the economy.

The impact was evident on the U. S stock market and the other financial institutions. In early , the stock market started experiencing a steady decline until it reached approximately 6, points by March The statistics started to flourish again between March and early when it exceeded 12, points. The points were recorded above 13, points by This was a positive improvement based on the comparison between the performances of the stock market during , , , , and The steady increase was quite beneficial to the economy of the United States at a time when it was experiencing the most drastic effects of an economic downtown.

The recovery of the United States stock market back to its functional status was a welcome effect that was essential to curb the effects of the financial crisis and mitigate the future occurrences of the same caliber.

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The positive performance in the stock market was also attributed to various factors concerning the efforts steered by the financial community to save the economy from succumbing to the financial crisis. Financial institutions are a conglomerate of bankers and providers of banking services. Lending firms and institutions are also part and parcel of the financial institutions.

There was an estimated amount of money by the International Monetary fund alleged to have been lost by the U. S banks and European banks. The money was lost through poor techniques of loan allocations between the time period of and September Approximately 60 percent of American banks were affected while 40 percent of the banks in Europe were affected.

Northern Rock bank of Britain was one of the worst-hit banks in the European region. The bank engaged in over leveraging matters of business that later forced it to seek security and protection from the Bank of England. This led to bank-run and instilled panic among the investors in September The mortgage lending firms were the most affected since most of them became bankrupt.

They were unable to secure their loans and financial benefits from credit markets. Almost all financial institutions predicted danger in terms of downfall and bankruptcy. The consequences included complete failure of the institutions to survive, subjection to takeover by the government or fire-sale in terms of duress acquisition by the willing investors.

Most of the U. S and European banks were completely eliminated from the financial map.

Pick Great MBA Dissertation Topics About The Recession

Global economy is supposed to be sustained at all costs. It is responsible for diversification of the resources and economic empowerment of the countries that operate under one umbrella. When one country is hit by an economic crisis, the other countries that engage in economic activities with the affected country are likely to experience an economic shakeup. Financial crisis is just like any other crisis but its effects are the most tragic because they impair economic growth. Economic stability is beneficial to a country while its instability has negative impacts on both the country and the citizens within its borders.

Matters of economic interest are given the first priority when it comes to security and protecting citizens from economic depressions and its aftermaths such as high production costs, high interests on the borrowed funds and the subsequent increase in commodity prices. Apparently, the financial crisis affected several states both directly and indirectly. The commentators, with too much experience in the world economic trends commented on the impending effects of liquidity on the global economy.

However, if the liquidity crisis persists, recession is likely to continue manifesting. With no mitigation measures urgently put in place to curb the liquidity crisis, it is likely that even more drastic effects of the recession will be experienced. Continued persistence of the financial crisis is predicted to affect the global economy which in turn can cause a collapse of the economy if not mitigated as soon as possible.

This is an argument from a group of certain forecasters. Contrary to this argument, there also exists another group of optimistic forecasters who believe that financial crisis is not likely to affect the global economy. School of thoughts has it that the financial crisis is likely to cause a major shakeup in the banking industry due to the melt-down of loans and savings.

In mid-October , the Investments Banks in the United States and the United Kingdom declared that continued financial crisis was a clear-cut indication of an impending global recession. They even had the audacity to estimate the time it would take for the global recession to start manifesting itself. They estimated the minimum period before the global recession could start shaking the economy as two years or less. Later on, the economists predicted that the crisis would end soon and that it was now the beginning of its end.

This was evidenced by the efforts made by financial stakeholders in the world.

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This thesis was limited by the absence of data regarding the Islamic services windows of conventional banks, the unavailability of data on the underlying assets of Islamic banks, and finally the use of accounting-based data, with the exception of using market-based Distance to Default DD. These limitations made the modelling and the subsequent inferences a very challenging assignment, one which required the dedication of a significant amount of time and effort.

Despite the limitations of the research, a number of recommendations can come out of the findings. Bankers at Islamic banks should focus more closely on economic conditions because the Islamic banking system is more affected by these than by global financial conditions. Furthermore, Islamic bankers should invest more in developing risk-management techniques, taking into consideration the unique needs of Islamic banks, to make their performance more stable and less risky.

Finally, Islamic banks should consider growing in size to gain from the benefit of scale, as the data show that size is linked to superior performance. Name: whole. Size: 3. Format: PDF. Contact Us Send Feedback. Country Code.

The researcher thinks important to examine some of the previous financial crisis in order to ascertain the differences between those ones, and the last crisis.