Many people have suggested several things; however one recommendation with which most of the analysts would agree is to go beyond micro-based approach to macro-based approach. This means that the approach needs to be changed from an individual perspective to the overall market perspective. In addition to this, it has been criticized that the role of financial institutions and financial regulations were insufficient in predicting and identifying such a major change in the economic condition of the country, at the time when the economy was going into recession. There has been a growing concern that a macroprudential approached needs to be adopted in order to make the economy more stable and strong. Macroprudential policy is defined as a concept in the banking regulation which defines about the financial instability in an economy and how these instabilities can be prevented through public policy. Analysts have claimed that a purely microprudential perspective is not satisfactory enough to maintain the stability of the economic condition. ...
It has also been predicted that the impact of financial crisis would have been a lot less if macroprudential policy would have been appropriate and the gap between the macroeconomic policy and regulation of individual financial institutions would have been narrower. After the financial crisis, analysts have recommended that prudential regulatory framework also needs to be recreated so that it would be more focused on the financial system so that such crisis do not occur again and the economy is able to recover from its position. In addition to this, the other main objective would be to ensure that the financial institutions do not impose undesirable costs on the society just like the cost that the overall society had to bear because of the recent financial crisis (Bank of England, 2009). MACROPRUDENTIAL POLICY Macroprudential policy helps in identifying the loopholes that occur in the banking regulation because of which chances of financial instability occur in the country. Not only this, but macroprudential policy helps in how to reduce these instabilities in the economy and it talks about preventive measures through which such economic crisis do not occur again. Macroprudential policy tends to complement microprudential policy and macroprudential policy interacts with different types of public policy which influences the financial stability of the economy. After the recent crisis, analysts have demanded a clear division between the two terms; macroprudential policy and microprudential policy. However the main objective of the policies would remain the same i.e. to minimize the risk of the economy. Many people demanded to have new set of macroprudential policy tools in order to make the
After the financial crisis that has disturbed the economic conditions around the world, it has been identified that there is a need for primary reform of financial system and this is the reason why many economists and financial analysts have re-evaluated the international financial and monetary system. …
This paper critically examines the general approach to measuring capital adequacy levels of banks as per the new standards implemented by the Basel III. The paper subsequently discusses the drawbacks of the Basel II standards that were exposed during the 2008 worldwide financial catastrophe and which consequently led to the development of the Basel III standards.
Even though the economic situation is under control in UK, the people blame financial institutions for the destruction of society. Regardless of the current situation, the financial service sector in UK has a promising future due to which most of the organizations are trying to establish their base at UK with an aim to accomplish their goals and objectives.
A number of weaknesses were exhibited in the banking sector, which contributed to the financial crisis including “excessive leverage, inadequate and low quality capital, and insufficient liquidity buffers” (Basel Committee on Banking Supervision (b), 2010, p.
The assists their clients to manage the risk and return related to their wealth, thus, optimizing the value of their money. There are different kinds of advisors, tied, multi-tied and independent depending upon the number of firms they provide advises on.
The financial instruments traded in the financial markets reflect current information available in the market. It also reflects people and expert opinion, assessed uncertainty and any other new information that is available in the market in order to be an efficient (Leigh, Wolfers, &Zitzewitz, 2003, p.1).
The underlying factors of the market that determines the value of derivative contracts may be currency conversion rates, interest rates, equity prices, commodity prices, etc. The derivative contracts may take the form of options, swaps, futures, forwards, etc.
The more the investment by the owners the more they attract the financing.
When the equity to debt ratio of the firm is high then debt financing should be taken. If the proportion of the debt to equity ratio of the firm is high then it is advised that the owners should increase their equity investment, that way they cannot jeopardize firm's survival.
The main intention of the study is to develop an understanding of the concepts of management in the banking and finance industry in general and how the established theories and principles are applied to the industry and some of the organizations. During the study, an effort will be made to observe the general working at some banks and financial institutions to seek answers to the following key objectives.
s largely on account of the reduced market entry barriers and a positive swing in demand for investment advice from consumers who need professional guidance in choosing from a wide range of financial products available in the market. The role of financial advisors in such cases