The Main Costs And Benefits Of The Financial Sector Of Uk

When you drive up to your bank or walk up to your teller, your main goal is to complete your transaction and move on with your day. The last thing on your mind is how that transaction is taking place. You don’t care what happens behind the scenes as long as your money is where it needs to be and is safe. As the banking and finance industry has transformed, so has the process of how your money is handled. To accompany those changes, regulators and lawmakers create laws designed to protect consumers, banks, and the economy as a whole. As you will learn, the history of the banking industry has changed drastically over the last two thousand years and even more so in the last century with the advance of technology. It only makes sense that those lawmakers must continue to update and invent new regulation to further protect those interested parties. My goal is to demonstrate just how rapidly and radically the finance industry has changed and how new elements being introduced to finance and banking will adapt the industry and the regulation.

Morrison suggests that government should try to make regulations that can make TBTF policy effective rather than, try to end the policy, which is impossible. Morrison discusses the role of the policy in designing suitable capital regulations, in the restriction of bank scope and in institutional design. The author argues that financial institutions receive help from taxpayers and government because regulatory authorities believe that its failure would have severe effects on the country’s economy.

“Since 2007 to mid 2009, global financial markets and systems have been in the grip of the worst financial crisis since the depression era of the late 1920s. Major Banks in the U.S., the U.K. and Europe have collapsed and been bailed out by state aid”. (Valdez and Molyneux, 2010) Identify the main macroeconomic and microeconomic causes that resulted in the above-mentioned crisis and make an assessment of the success or otherwise of the actions taken by the U.K government to resolve the problem.

The 2007-2009 financial crisis is generally considered to be the worst since the Great Depression of the 1930s. It famously led to some major financial institutions such as Lehman Brothers to collapse while many others including HBOS and the Royal Bank of Scotland had to be bailed out by the government. The stock market crashed, unemployment escalated and we were plunged into a recession sometimes referred to as the Great Recession. Although the recession is now considered to be over, its effects can still be felt in the form of high rates of unemployment and an incredible rise in our country’s debt. This essay will aim to succinctly and coherently explain what happened during the 2007-2009

* Direct finance: borrowers borrow funds from lenders in the financial market by selling them securities (no intermediaries)

A: Most investments in the economy would fail to take place if there were no financial institutions because many independent investors do not like to take large amounts of risk. By utilizing financial intermediaries, which are “organizations that receive funds from savers and channel them to investors,” people are given peace of mind in knowing that their source of money/investing is more stable and accounted for. Those who apply this principle also value the liquidity, or convertibility, that financial institutions provide in the case of emergency or cold feet.

The sectors within this industry, which carried out actions which lost our confidence, could so easily have been avoided if standards were not reduced to a minimum and if stricter rules and supervision were placed on these institutions. If these standards and rules had been followed, as they appeared to be on the surface, the financial service industry would still have the loyalty and confidence they so wrongly received in the ‘boom’ years. It is therefore in my opinion that any procedures carried out by the financial service industry or the government to restore customers’ faith is in vain. I am of the

History shows that financialization has not only touched the United States, but has been a part of the cycle of economies throughout time. It affected Spain in the 1300s as well as England in the 1800s and 1900s. The definitions of financialization are many. One definition says that with regard to the operation of the economy, it has to do with the increasing importance of financial markets, motives, institutions, and elites (Assa 2012). Adam Smith defined it as the “growing scale and profitability of the finance sector at the expense of the rest of the economy and the shrinking regulation of its rules and returns" (Collins 2015). It has also been said that in addition to its influence over the economy, its reach extends to other societal institutions such as government (Gautam 2014). The literature on financialization written in the last few decades highlights negative impacts on “both the real and financial sides of the economy” (Assa 2012).

Since its establishment, Bank of England has played a significant role in the banking industry and business development of the UK. As a reflection on the difference between Bank of England and high street banks and the evolvement of Bank of England in recent years, this article will focus on the following issues. The first section will give an explanation of high street banks and look at the brief history of Bank of England, followed by comparing their differences in several perspectives. The second section will look at the Financial Services Act 2012 which gave the Bank of England more powers and responsibilities after the financial crisis. The third section will discuss the adjustments in governance and accountability of the Bank of

In the past two decades, economic analysts and policy makers have recognized that the financial system can significantly contribute to economic growth. Observing the changes that have taken place, a result has arisen that a liberalized financial sector operating in a competitive, open environment with market-based supervision based on international norms, is the best contribution to economic development. The new market-based paradigm for the design of financial systems contrasts with earlier thinking about the appropriate role for official intervention in the financial system. In the past, financial institutions, especially banks, were considered "special" entities in which it was appropriate for governments to intervene regularly in detecting a wide range of economic and social objectives . While, in earlier times, the financial sector differentiated strongly among countries and influenced by national rules .

Money as Debt. A comprehensive and simple explanation of the current banking industry with an

Financial markets play a critical role in the accumulation of capital and the production of goods and services. The price of credit and returns on investment provide signals to producers and consumers—financial market participants. Those signals help direct funds (from savers, mainly households and businesses) to the consumers, businesses, governments, and investors that would like to borrow money by connecting those who value the funds most highly (i.e., are willing to pay a higher price, or interest rate), to willing lenders. In a similar way, the existence of robust financial markets and institutions also facilitates the international flow of funds between countries.

List of abbreviations List of tables Acknowledgements Abstract 1. 2. 3. 4. 5. 6. 7. 8. Introduction Problem statement Objectives and hypothesis of the study Literature review Structure and performance of the financial sector in

A strong and resilient banking system is a foundation of sustainable economic growth. Banks are at the centre of the credit intermediation process between savers and investors. Moreover, banking institutions provide critical services to consumers, small and medium-sized enterprises, large corporate firms and governments, which rely on banks to conduct their daily business, both at a domestic and international level. However, the failure of a bank is unlike that of a non-bank firm, owing to their systemic risk. The failure of banks have the ability to impose large costs on society – externalities – which are not borne by bank shareholders; banks are materially different in their financing, business model and balance sheets

An efficient financial sector will have its impact on economic well-being of any country by efficiently managing its financial resources. Meanwhile an efficient banking sector, usually a dominant entity in the financial sector, would uplift the well-being of the society especially through improved profitability, greater amounts of intermediated funds, better prices and increased financial system 's strength and stability. Such banking system which efficiently channels financial resources to productive use, is a powerful mechanism for long run economic growth [Levine (1997)].