The Crisis And Financial Crisis

2128 Words9 Pages
Since 1970s, with the continuously deepened process of financial liberalisation and financial deregulation, the increasing improvement of financial innovation and the intensified fierce competition, diversified operational strategy has shown an increasingly apparent trend among financial institutions. A wave of business diversification swept global financial firms from the later 1980s until the recent financial crisis happened. From the microeconomics perspective, comparing with specialised business structure, a diversified operation may provide financial holding groups more benefits that generated from information advantage, the economy of scale and effect of coordination. Also, diversification is considered to disperse risks that exposed to financial holding groups. Many people believe that the development of global financial institutions shows a continuous trend in business diversification and cross-industry business operation and such trend will keep going on in the future. However, the subprime crisis and subsequent downturn again drew people’s attention to the pros and cons of universal banking. Around 2008, the global financial system was suffered a destructive crisis which especially destroyed the western financial world heavily. To prevent such crisis in the future, discussions and debates were being heated. Solutions and measures were proposed by many countries’ regulators. Factors that several reasons underlie the financial crisis have been widely blamed, for

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