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EVALUATE THE MAIN EU REGULATORY REACTIONS TO THE FINANCIAL CRISIS INCLUDING THE CHANGES TO THE EU REGULATORY PROCESS FOR FINANCIAL SERVICES
Finance & Accounting
Pages 6 (1506 words)
The financial crisis that rocked the European Union from 2007-2009 affected the economies largely because the mega financial institutions within Europe were operating in a similar business model to that of the United States prior to the crisis.
Evidently, the financial crisis began in the second quarter of 2006 in United States. To this end, there were significant losses registered banks in United States as a result of sub primal foreclosures of mortgages (Chrisdoulaki, 2010). Consequently, since the mega banks in European Union and United States were operating under business models which were similar, the financial distress facing the United States were replicated in the European Union. To this end, the mega banks located on both the European Union and United States suffered from under-capitalization and insufficient liquidity reserves. Evidently, the financial regulations of the European Union are carried out at the continental level as well as within the individual countries. The European regulatory response to the crisis was significantly slower to that of the United States. The onset of the decline in profits within the United States was immediately reflected by a similar decline in profits by E.U banks (Clark, Feldman, & Gertler, 2000). The German government and regulators in the finance industry requested the European Commission to bail them out within six months after the crisis began. ...
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