The main aim of regulation is making the reporting system transparent so that the market participants can have a better idea about the risk that they are undertaking. The above mentioned financial crisis was mainly attributed to insufficient regulation therefore a change in the regulatory framework is needed to avoid this in the future. An important official of the IMF has attributed regulatory failure to guard against excessive risk as the reason of the 2008 financial crisis. However excessive regulation is also one of the reasons that contribute to the financial crisis. As per the Basel II norms the banks have to increase their capital whenever there is an increase in the risk. This adds to the crisis, as the banks reduce their lending for meeting the capital requirements. When the Fed announced the hike in the interest rates the installments were re-set which resulted in widespread delinquencies. Faced by the rising foreclosures the banks had to sell off their assets for maintaining the capital requirements. This led to a steep fall in the housing prices. For preventing this crisis in the future various international bodies like IMF demanded strict disclosure and regulatory norms. This procedure requires changing the existing accounting standards and making the disclosure of off-balance sheet risk more effective. The international financial institutions have to play a major role in managing this change. Initially the changes of regulations and disclosures may not be acceptable. Here the international bodies have to play the key role in explaining the significance of the change. This will help in removing the restraining forces and will facilitate in reaching the equilibrium stage. When a change is implemented there are two contrary forces that act simultaneously- driving forces that support and restraining forces that oppose a change. To make the change successful it is important to explain its significance to the people in
Financial crisis leads to a value erosion of the assets of the financial institutions as is the case with the current financial crisis that created a panic in the market and led to the worldwide recession. Although the crisis originated in US, it gradually spilled-over to the…
Additionally, soon after the attacks of 9/11, the Fed reduced the interest rates to the level of 1 percent with an aim of supporting the labour market. In the late 1990s and the early 2000s, many developing countries put a large amount of savings into the US banks and other financial institutions (Shomali & Giblin, 2010).
But one of the major roles of the business schools is to provide possible and effective ways or measures in order to prevent the financial crises that the global economy is facing in modern times. Business schools are expected to provide solutions for preventing the brutal financial crises that the largest economies of the world like USA, European countries, Japan etc.
2008–2012 Spanish Financial Crises Introduction Most economists agree that the 2007-2012 global financial crisis was the worst since the 1930’s Great Depression. The crisis was characterized by the threat of complete collapse of large financial institutions across the world, downturns in stock markets across the world, bailing out of banks by national governments and general slow-down in economic growth and development around the world (Shiller 35).
The main focus in the essay is on the measures, introduced by the Brazilian government to help curb the unemployment. The actions included cutting of a large corporation’s tax and offering free classes to the public. This measures together with other economic policies, helped the economy from undergoing a deepened recession
It looked just like the kid that suddenly got caught with his hand in the cookie jar groping in shock for the words that just won't come and simply mumbles; What Politicians and executives alike sounded the alarm and stressed the need to act immediately by making billions of dollars available for bailouts and buyouts.
system had been increasingly deregulated in an attempt to achieve greater efficiency, but the increasingly liberal policies have progressed to a point when innovative contracts have been implemented with less than diligent study and with a disregard for risk in the face of