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Banking failures - Essay Example
Finance & Accounting
Pages 7 (1757 words)
This study aims to analyse the need of regulatory framework for the UK banking system in order to ensure financial stability and reduction of usage of public funds for recurring crisis; to determine the effect of corporate social responsibility and ethics hazards on the banking system and regulators to mitigate banking failures…
The research is based on the recent International financial crisis of UK banking system 08/09, which failed to adhere to existing financial and national regulations. The significant impact of shadow banking system that facilitates complex financial structures, derivatives and asset securities have resulted in extreme trading risk as compared to the normal banking operations. The banking system is regulated by the competition commission, which summon operations of the banks towards a complex monopoly for banking giants as compared to the smaller banks. Banking failures are termed as shutting down the operations of the bank due to inability of paying of its depositors or have lesser funds to meet its creditors and regulators obligations. The distributions of its assets and liabilities are evident due to insolvency of the bank which implicit that its assets are undervalued as compared to its liabilities at market value. The banking regulations are accredited by three organisations mainly FSA (Financial Services Authority), Treasury and Bank of England. The interventions of the regulators were limited to aggressive situations only but since the banking crisis, the regulators are alarmed with the current regulation system. The most critical drawback for increased regulations in United Kingdom is enforcement of international banks to operate in lesser regulated environment offshore. This could result in a huge impact on the employment and financial institution of the country and across the globe. ...
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