Causes and Impact of the Recession on Banking Sector

Causes and Impact of the Recession on Banking Sector Introduction Growth Management: Two Hats Are Better Than One By Andrew Lester page 169 Says there is a definition of an economic recession-two succsive quartets in a year when the economy shrinks rather than grows. In the presence of economic recession, the effected countries are extremely in the state of anxious..The developed countries are trying to do everything to avoid the impact of recession in their country, but, it is true, the developed countries are the first affected of the economic recession because of the economic slowdown. It can be understand with the simple explanation through the different principles of economic, when any country played a big role in international trade market in different sectors; it is true that the economic effect will be more swear on their land. Recession affects the GDP or gross domestic product of the country and the downturn in different economic activities are facing the declination (smith, 2009). Rationale Recession is the phenomena which is not new, but it occurs from time to time. In this dissertation we will focus on the economy of UK under the shade of recession. The economic changes which are being brought by the recession. Banks are the finance provider to the other sectors which in turn provide growth to the economy. This late 2000s recession aggravated the situation. Mortgage rate was high they cut back loans and redundant people. The problem was clear in the late 2000s recession when the international investors and domestic holders withdrawing their deposits and the banks were reducing the availability of loans. It was really hard for the clients to find a reasonable mortgage rate or mortgage offers. In the previous year, the external economic environment has greatly affected UK banking and finance. Globalization linked economies so that economic shifts and changes in one economy affects the other as in the case of the mortgage market in the United States and the banking sector in the United Kingdom. Technological innovation also supported the linkage of economic sectors so that a downturn in one economy is likely to affect other economies. This finds expression in the mortgage market of the United States and its effect on the banking sector in the United Kingdom. The trend in the United States is the engagement in the sub-prime mortgage market to meet growing demand for housing. As such, many banking and finance institutions engaged in sub-prime mortgage, which in effect is approving loans for people who do not necessarily meet the credit rating criteria previously established. As a result, many people purchased homes on mortgage financing. As these loans matured, many were unable to pay the mortgage loans. This resulted to the sub-prime mortgage market crash in 2007. In the meantime, the United Kingdom also experienced housing demand. This encouraged new firms to engage in the sub-prime market or existing banks to establish sub-prime mortgage services such as Northern Rock. The sub-prime mortgage market crash in the United States affected the banking sector in the United Kingdom, particularly the banks that engaged intensively or almost exclusively on the sub-prime market. The crash in the United States signalled the problem that is also starting to heighten in the United Kingdom because of a number of reasons. One, large banks present in the United States and involved in the mortgage market were in the process of consolidating their losses so that these banks refused or had not ability to extend short term loans to other banks, which heavily relied on short-term loans from various banks for its sub-prime mortgage system to work. Another, banks in the United Kingdom also refused to extend further loans to the mortgage market or to financial institutions relying on short-term loans. This led to a credit crunch that eventually led to huge losses and bankruptcy. In this crucial time some banking institutes had effectively exercise of sufficient internal control practices to support its sustainability target by balancing risks with expected returns as well as some important decision taken and implemented by board of directors like to not heavily involve in mortgage market helps them to survive and book enough profit in this time. In this dissertation we will focus on the impact of recession on some financial firms who couldnt survive and book major losses up to close down with the example of Northern Rock, who announced bankruptcy. The Focus will be on the Barclays that how it has bear the pressure of recession and it flourishes. We will find out the policy and the methodology to reflect the waves of recession. Dissertation will also focus on strategies to be implemented and suggest some changes to be made in operation of banking business to not repeat these again. Some other financial firms who survive and balance its profitability by quick important decision and implement of some strategies with the example of Barclays, top banking firm of United Kingdom Literature review This dissertation will also discuses the financial crisis in UK and what is the economic condition at present. Christopher Dow said that   Recession are best defined as shortfalls below the capacity growth rate,thus accompained by growing unemployment. the initial defination of a large recession(that output should fall absoltly) is thus equivalent to a requirment that the rate of out put growth should fall below the norm(or capacity rate) by more than the norm itself. Five periods were identified on theses criteria as major recession;1920-1,1929-32,1973-5,1979-82and 1989-93. On January 24, 2009, Edmund Conway, Economics Editor for The Daily Telegraph, wrote that The plight facing Britain is uncannily similar to the 1930s, since prices of many assets from shares to house prices are falling at record rates [in Britain], but the value of the debt against which they are held remains unchanged. Recession in this age of globalization is not to be kept at a single place it tranfer its effect from one sector to the other and from one country to other . It will also highlight what are the main causes of Northern rock banks down fall due to various factors which are thoroughly discussed in literature review with the help of print media, companys case studies/websits,books,gernerals and websites also what are the affects on consumer.It is also conclude ground realities of global recession as well as enhanced information of worth while recourse in order to understand the matter of crux of world economic globalization. The subprime mortgage crisis has already suggested living standard of people around the world in line with fare of US and global economy and now it threatens to derail the U.S. economy. Origin of economic crisis and how to tackle them, advice to take valuable measures to get over the economic crisis has been revealed by best selling economist Robert Shiller in his book. An aggressive response need to be taken by people in order to restructure the intuitional basis. He also shows in his book that how these economic bubbles can be further dangerous in near future . Northern Rock banks and several of its customers withdrawal their money and savings due to there was news in the market about bankruptcy of bank which are received from Bank of England. This was certain one the reason that the prior consumers of Northern Rock have placed their savings in other banks considered to save better constancy even if the interest rate slightly lower then others. However, these consumers and their experience with Northern Rock mostly affected their future financial planning and decision-making. Barclays bank was formed in 2006 with the forshighted motive to become powerful development platform for Barclays and targeted the rapidly challenging market. The idea was to provide the better services for retail and commercial customers in markets around the globe. In 2008 annual report the group chief executive John Verley reported that that We have managed Barclays carefully through this period. We have remained solidly profitable The main reasons for Barclays survival in credit crunch is followed by its constant approach to make important progress towards success of goal by attracting 9 Million new customers while offering them cost saving packages. Richard Posner in his book describe the way of getting ride vicious credit crunch and the reasons of economic crisis by his in-depth research.   By Marc LaBonte, Thecapitol Net, Patrick Purcell: describes the Recession, Depression, Insolvency, Bankruptcy, and Federal Bailouts and to determin how resession begin or end. By Mark Zandi:give the broad accessible analysis for the economic crisis from 2007-2009.the answer is also give thoroughly in his book related recession and new version is update with latest events regarding fall of 2008 financial collapse. Gjerstad, S.,et al(2009) said in the article ‘In just the past 40 years there were two other housing bubbles, with peaks in 1979 and 1989, but the largest one in U.S. history started in 1997, probably sparked by rising household income that began in 1992 combined with the elimination in 1997 of taxes on residential capital gains up to $500,000. Rising values in an asset market draw investor attention; the early stages of the housing bubble had this usual, self-reinforcing feature. It is noticeable that lower mortgage rates are attracting, but somehow the financial institutions have a big shortfall. They have to suffer for it. In general sense the housing market is the direct centre of the crisis. The Financial disaster had started in USA and spread out to Uk and the rest of Europe. Three years ago when northern rock a mortgage bank was teetering on the brink, the financial authorities considered keeping it float with secret emergency lending but it was bank run(Anon 2009) . The main objection at that time came from the financial services authorities that a listed company should have to disclose the emergency lending to avoid misleading the business market. BBC (Aug2009) reported thatNorthern Rock relied heavily on the markets, rather than savers deposits, to fund its mortgage lending. The onset of the credit crunch has dried up its funding. Schifferes,S. (2007) in his article reported that â€Å"A wave of foreclosures and evictions is about to sweep the United States in the wake of the sub-prime mortgage lending crisis. Another bank to discuss is northern Rock which collapse as a result of recession. Hyun Song Shin in the Journal of Economic Perspectives, said ‘The U.K. bank Northern Rock became the first high-profile casualty of the global financial crisis of 2007‚Äà ¬2008 when it suffered its depositor run in September 2007. In spite of the television images of long lines of depositors outside its branch offices, the run on Northern Rock was unlike the textbook retail depositor run caused by coordination failure. Also, contrary to received wisdom, its reliance on securitization was not an immediate factor in its failure. Rather, its problems stemmed from its high leverage coupled with reliance on institutional investors for short-term funding. When the de-leveraging in the credit markets began in August 2007, Northern Rock was uniquely vulnerable to the shrinking of lender balance sheets arising from the tick-up in measured risks. Aims and objectives. The dissertation aim will be recognise secondary data of global recession effects in the UK economy as well as in primary research study determining first hand information on the recent situation of global recession affecting Uk economy, in terms of banking sector and mortgage sector .The first objective of the research is to find out the most suitable strategy that can be use by the institutions which in return can increase their market performance..For the objective, the need to use collective research and information placing weight to global economic recession facts and figures in the year 2008 and present, and its impact within UK economy. . Research Questions The dissertation will aim to find answers the following research questions through the analytical techniques and the data collections. What causes an economic recession? What are the effects of an economic recession on the financial sector? Northern rock was collapsed during the recession period what was the reason behind? Barclays Plc is not affected by the recession. What are the strategies they adopted? What is the short term and long term strategies adopt by a business in the recent recession? Research Methodology The main objective of this analysis would be to examine the main causes of recession and the impact of recession on the financial sector with detail research on Barclays Plc and Northern rock Bank. This dissertation will discuss the strategies they applied to survive in recession and what are the problems they had faced. The dissertation will also discuss the economic condition of UK banks and housing market. It will also analyse that what are the strategies, which have been adopted by the financial sector. For the research methodology, it is important to bring in related knowledge towards the UK recession and its impact towards the financial sector. Negatively or positively from within the case study interviews to be given by some UK small medium enterpriser and multinational corporations, interviews will not be of less than hundred, these are the ones who are effected by recession regarding their loss of jobs and the status from their employment from the UK business sectors. Types of Data The main type of Data will be collected for this purpose of this report is as follows. Primary Data Primary data is the information, which is collected by the researcher from his own analysis. It could be in the form of analysis questionnaires, interviews, observations, case studies or critical incidents. The primary data, which is collected from the different sources, could be either qualitative which looks at the explanation behind the given responses or quantitative which is in the form of numbers and which can represent in the form of a graph or a table. Secondary Data Secondary data is the information that is already available. This could be including books, reviews, press releases, newspaper, news bulletin, or reports etc. Again secondary data collected could be either quantitative or qualitative. It depends on the source and type of the information collected. Primary Data Questionnaires A research question is a kind of survey where the information is collected with the intension of arriving at the different conclusions on an issue. This kind of survey will help the researcher to get impartial result and if required the researcher can predict an issue or advice changes. Questions will be divided to the employees, managers of big financial companies of selected banks, mortgage companies and the housing sector. The question will be targeting a most specific issue of the discussion and each response would be analysing against each other. Survey may be deals with a variety of media (paper-electronic-verbal). Different kind of method can be used internet, face to face, telephone and mails.. The population will be divided in managers employees and customers. Interviews Interviews will be held on the spot with the people of different sectors. It could be on phone or face to face either when the respondent meets the interviewee over the phone or directly and answer some circumstantial questions relating to circumstantial issue. This kind of interviews is more advantageous since not only respondent can convey himself or herself and interview can ask to elucidate the answer. Secondary Data Sampling method Stratified sampling Stratified sampling is a method where the population is based on groups. For the dissertation purpose, we will divide the populations. Managers of the companies This will include managers who are in direct contact with financial departments, including policy and decisions makers. Employers This group directs to those who help to apply the strategies or changes. Their opinion is indispensible as they are indirectly related with the running of business Customers This group directs to those who are directly and indirectly affects with new changes and strategies. The big advantage of stratified sampling is that question will be related to the details. The interviewer wants to be answered and there will be less chance that the respondent will simply guess an answer because they have already been chosen whether they are in a position to answer the question. There is another advantage of this type of sampling method is that it increases the chance of having a more relevant answers as compared to simple random sampling. It is possible that the disadvantage is that it makes the analysis a bit complex. Simple random sampling This is a method where a small group of samples are selected from a large group of people. the advantage of this method is simplest and straightforward and disadvantage is time scale may be too long. Data analysis There are two major approaches to analysis the data and collect an information qualitative and quantitative research method. Sometime required information is already available and required only be pull out. However, in the analysis sometime information must be collected. This kind of research will call back the second approach. The research needs to be collected and it is not already available. The research mainly relies on the primary data. The nature of the problem which researcher will explore in this report is suitable for both research methods. The secondary data in this research will be gathered from reports, books journals, internet journals-internet websites, companys website, articles and every other written source of data. As primary data will be collected through the interviews and questions, then all of the collected data will be analysis to accomplish the objectives and aims of the dissertation. Qualitative Research Technique Qualitative research means to know why, not the, how, which is collected by many methods like interviews, feedback, forms-emails. Qualitative research is used to understand how people feel and they think-depth interviews or group discussions are two common methods to use for collect qualitative information. Quantitative Research Technique Quantitative research technique where a research method depends less on interviews, questions, observations but it is more focused on the numerical data and statistic collection and analysis. Information collected from the financial sectors, banks, mortgage companies will be combined together and put into tables and graphical charts to view the opinion on different topics and to review overall responses. Limitations of the Study Validity and reliability Validity directs to the truthfulness and accuracy of the research. Research data may be mislead if a question will be misinterpreted or misunderstand. Reliability is a various statistical tests. There is another way to test the reliability is to ask a same question with different wording in the research survey. It will help to collect a right data. Data may be misleading if the interviewee gives a judgment instead of straight facts. Therefore respondent will be bound in many ways from freely expression views with the help of close ended questions. Interviewing It may be challenging to finding the right person at the right time because of the current economic situation. A financial sector would face the different challenges and then an interview for an academic research could end up with a long way wait. Confidentiality As the business market is very competitive and the fact is that bit information about the company can give a rise to the competitors, a company might not want to share data. Although a confidentiality, agreement will be signed and disclaimer will be issued. Response times The response time to the questionnaire and interview setting mostly rely on how busy the management and staff are at the research time. This might make collection process lengthier Recent external factors Economical changes have a direct impact on the financial sectors and therefore theses changes have impact on their staffs as well. It is possible that feed back could be more a response to the recent external changes and not because of the business to ensure employees are happy and content. Time Scale Planning Activities May 05-30 May-June 30-22 June-July 25-02 July 04-14 July 16-26 July-Aug 27-07 Aug-Sep 08-25 Sep 26-30 Project proposal ___ Literature Review ____ Research Methodology ____ Empirical study ____ Empirical result ____ Recommendation ____ Conclusion ____ Thesis submission ____

Chip and Bins Case

The project is not fully-developed: Because the project is not well-prepared which leads to more problems when it was carried out in Southeast Norfolk like : Technical Failure, Lack of knowledge†¦ 2/ Examine the problem Definitions: After discussing the above definitions, we decided to classify the problems as below: We think that the cause of all troubles is because the project was not well- planned. 3/ Here is our alternative solutions for the problems: Solutions Time Money Practicability Hold a workshop about the benefit of this project x Find out alternative technologyCreate a competition for household in which house have least waste they will win and get reward X Conducting a survey on the residents' opinion and collecting their suggestions for the problem. X Enforcing fly-tipping legislation, prosecuting those dumping rubbish. X Reward for households that have the least waste. Reward for denouncing fly-it peers. Reducing a reasonable amount of council tax for the residents Postpone the project for at least 6 months. Showing people the negative effect on their lives if they don't recycle. X using some celebrity endorsement/ambassador.David Beckman, Adele†¦ ) X FREE Establish a technical team that can fix the system 24/7. 4/ Finally, we decide to choose these solutions: Establish a research on Southeast Norfolk District. This solutions will help us understand more about the people, what do they want from the project, what do they misunderstand about the project. Showing people the negative effect on their lives if they don't recycle. This solution will take a direct impact on people's kindness when they realize what they've done to the environment around them. Using some celebrity endorsement.They will act as Environment Ambassador to help promote the project, usually they will do it for free because this is also a good chance to promote their images. Hold a workshop about the benefit of this project. After TA king research, we will organized a wo rkshop to deliver the message to the people about the project, the environment to make them understand the true purpose of the project. Reward for households that have the least waste. It will encourage people to be more active, competitiveness is something that everybody has so they will be more happy to join the project.

How Edgar Allan Poe’s Writings Illuminate His Upbringing Essay

My thesis statement is that Edgar Allan Poe’s writings illuminate his upbringing. His writings illuminate his upbringing because his childhood was very hard, full of darkness, and he never experienced love from a parent. Therefore he thought the world was like his life was, dark and dreary. So that is why his stories are always sad, and full of heartbreak. The writings by Edgar Alan Poe are for the most part sad, dark, dreary, and mysterious, they are just like how his life was. After the age of two Poe never had real parents only people who looked after him after his parents died. He didn’t know if his home was only temporary or if it was for good, for all he knew the people he was living with could kick him out of their house and stop supporting him. He lived his life day by day not knowing what the next day would bring or if he would have a house to live in the next day. His future was never certain, he didn’t have anything in life to look forward to, and he didn’t know where his life was leading him. Just like in his book â€Å"The Cask Of Amontillado† where Montressor leads Fortunato down a dark set of circling stairs, and Fortunato doesn’t know that Montressor is leading him to his future which is his death. That is like Poe’s life because Poe doesn’t know where his live is heading just like Fortunato doesn’t know where he is going walking those dark stairs. Everything in Poe’s future is dark and dreary, not clear as to what is going to be next for him. When Poe was younger he went to the English and Classical School which the sons of upper class families attended. Since Poe came from a relatively poor family, he didn’t feel like he fit in very well. He felt like an outcast, even though he was most likely smarter than most of the other kids he wasn’t brought up the same way. That is the same theme as in another book he wrote called â€Å"Great Expectations†, where the main character, Pip, goes through the same problems that Poe did. Pip’s parents died when he was very young and he was relatively poor. He got a job working with a very rich lady who had a daughter Pip’s age. Pip fell in love with her but he felt different because they were on two totally different social levels. Pip was poor and the lady he worked for was very rich. Also the house that Pip worked in was very dreary, and the curtains were always closed and no light was allowed in the  house except for candles. So that gives the impr ession of sadness and that is just how Poe felt like in his life. Edgar Allan Poe never got any breaks in his lifetime, everything he got he worked very hard for. Since he never got any breaks in his life he never took anything for granted, that is why his writings were always so successful. He put a lot of time and effort into his writings, and they were similar to his own life. Also, since he always had to work for everything he wanted once he was able to write a book he worked even harder so he wouldn’t lose what he had earned, and that is why his writings are still talked about today. That concludes my thesis paper, all of those proof paragraphs prove that Edgar Allan Poe’s writings illuminate his upbringing. Now that I have done research on Poe I understand why his writings are the way they are, and I think that he is probably one of the best writers ever because of everything he overcame to become a writer.

The Characteristics Of Information Security - 1156 Words

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