External Business Environment of Bancfirst - Essay Example

The more significant of the two factors is the economic environment. This is because the bank is more vulnerable to economic environments, such as recession, as compared to the regulatory environment that is manageable through internal policies (Boyes and Melvin, p. 381- 384).

Factors that influenced the demand curve of houses to shift to the right are increased disposable income through mortgages and a consequential demand level. This increased the aggregate demand to raise the equilibrium price (Boyes and Melvin, p. 49- 50).

Factors that caused a shift in the supply curve are reduced consumer financial capacity, the legal provision for foreclosures, and the reduced number of people who could buy the available homes. This had the effect of lowering the equilibrium price (Boyes and Melvin, p. 54- 56).

The U.S. economy was in the depression stage during the housing crisis. This is because of the comparative condition that, unlike previous poor economic conditions in which banks could resell foreclosed homes, the period was the worst, and such resale was not possible (Boyes and Melvin, p. 132).

The economy is currently at the recovery stage, a stage that follows depression toward restructuring. The recovery period is also identifiable by the transition that followed the crises such as the government initiative to save the banking sector by bailing them. The banking industry has however not reached its peak performance (Boyes and Melvin, p. 132).

The government's efforts to bail out the banks did not prevent depression. This is because it played a microeconomic role in a single sector of the economy instead of ensuring a comprehensive approach to the macroeconomic problem. This is however not the proper role of the government whose responsibility covers all sectors of the economy, including the protection of consumers.

The company’s identified risk factors include inconsistency in the “economic and financial environment” that sometimes adversely affect performance, lack of confidence in the government’s ability to ensure a stable economic status, variation in interest rates that sometimes lower profitability, and strict legal environments that restrict operations (Bancfirst). Other risks include high insurance costs in the future and adversely varied tax rates (Bancfirst, p.15).  

Banks, like other types of business enterprises, are therefore susceptible to their external environments that can be economical, legal, or political.