Financial Crisis And The Failure Of Corporate Governance

1759 Words8 Pages
1. Introduction The financial crisis of 2007-08 was also known as subprime crisis or credit crisis. Since the bubbles of real estate market in America came into surface on August 9, 2007 investors were losing their confidence on subprime mortgage assets and the liquidity risk followed behind. Even though the central banks of many countries tried to turn around the situation by injecting huge amount of capital to the financial market, the financial crisis still broke out and spread to Europe and other parts all over the world especially on the backing sector. The purpose of the essay is to identify the causes of the global financial crisis on the angle of the failure of corporate governance in UK banks such as Northern Rock and RBS which will be discussed in Section two. The reforms of UK governance post crisis will also be discussed especially on the aspect of banking risk management in section three. In the fourth section conclusion will be given. 2. Causes of the Financial Crisis In this section, the impacts of the financial crisis from different orientations will be shown in the first place. Then, the role of the failure on governance of UK banks will be analyzed. 2.1. Consequences of the Crisis The explosion of the global financial crisis impacted many areas of UK. Because of the uncertainty of the market consumers lost confidence on the economy and households cut spending particularly on manufactured product which leaded to the sharp fall in industrial production
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