The Main Forces that are Causing Unprecedented Change in the Corporate and Wholesale Financial Markets

The banking industry has undergone major upheaval in recent years, largely due to the lingering recessionary environment and increased regulatory environment. Many banks have failed in the face of such tough environmental conditions. These conditions

Q. 1. What were the major factors that led to the recent financial crisis? How did we get here?

The World banking system has witnessed some major transformation. Changes in regulations and laws, advances in information and banking technologies, acceptance of the market economy by less open economies and the adaptation and integration of international financial markets which offered opportunities and challenges

This paper is about the financial crisis in 2008 and how it all started as well as the ways that banking has operated and is operating today. I have watched all of Chairman Bernanke’s college lecture videos and he has gone into many different aspects of banking including how the Federal Reserve began, what lead to the recent financial crisis, and what we are doing as a nation to see what we can do to help eliminate from happening again. First, I will be summarizing Chairman Bernanke’s four lectures he did in 2012 at George Washington University.

The 2008 US financial crisis triggered global economic shocks, not only profound influence or even change the financial pattern of the world economy, but also a vivid lesson to the global banking industry. After the outbreak of the crisis, the United States Government has put forward the toughest financial reform bill for decades, expanding market intervention, and with economic globalization and financial liberalization, we need to absorb the experience and lessons of American banking system reform in the context of financial crisis. Citigroup is a typical example of the bank that influenced by the financial crisis and restructured.

Banking industry is currently operating in the maturity stage. There are many players as a result of which the competition is quite high. Competition is broadly based on the levels of fees charged, reputation, the range of services and products provided. As the industry consolidates and the range of services broadens, the size and geographic spread of industry players in increasing. Providing a high set of barriers is the capital and regulatory requirements within the banking sector. Entities that want to start up as a commercial bank and/or investment bank or securities dealer face significant establishment costs in order to gain acceptance and meet market reputation. Furthermore, start-ups require up-front expenses in order to establish proper distribution channels. Globalization is high and the trend is increasing. Cross-border sales and acquisitions of banking operations are also occurring, as assets are shuffled in the race to raise capital.

(Lecture 2, Law of Commerce, Investment and Banking). For example, Martin Wolf wrote in 2009: "...an enormous part of what banks did in the early part of this decade – the off-balance-sheet vehicles, the derivatives and the 'shadow banking system ' itself – was to find a way round regulation." (Wolf M., 2009). Off balance sheet financing made it possible for firms to look less leveraged and allowed them to borrow at cheaper rates. (Simkovic M., 2009). Analysis by the Federal Reserve Bank of New York showed that big banks hide their risk levels just prior to opening data quarterly to the public. (Kelly K., McGinty T., Fitzpatrick D., 2010). From this moment it is possible to ask the question: What did regulators do at that moment? Critics have argued that the regulatory framework did not keep pace with financial innovation, such as the increasing importance of the shadow banking system, derivatives and off-balance sheet financing. In other cases, laws were changed or enforcement weakened in parts of the financial system. Several critics have argued that the most critical role for regulation is to make sure that financial institutions have the ability or capital to deliver on their commitments. Another critics have also noted de facto deregulation through a shift in market share toward the least regulated portions of the mortgage market. (Simkovic M., 2011). In overall, regulatory system makes bad impression as it seems not working properly. Author Roger

In the following essay, I will briefly summarize some of the main events leading up to the global financial crisis. Following this, I will discuss the effect this had on the banks and ergo the credit supply, then examine how this contributed to the corporate failure. I will also pay some attention to how the market imperfection can affect firms real decisions. Finally, I will sum up the main points of the essay.

The financial crisis in 2008 was been considered as the worst financial crisis since the Great Depression. One of the major reasons of the crisis was that banks in the States were given permission by the repeal of the Glass-Steagall legislation, which allowed banks to affiliate with insurance, real estate, security. The goal was to create financial firms “better equipped to compete in global financial markets”. With the firewall between commercial banks, which make loans and take deposits, and investment banks, which underwrite securities removed, an opportunity rise for banks to create and push more money and eventually to speculate on financial markets. The financial crisis reminded us that the banking industry has a serious influence

This report will analyze this Financial Crisis. Firstly, the reasons for which the banks failed will be discussed and the future of such failing banks will then be analyzed. This report will then examine how to avoid a similar crisis in the future and the current and future legal regulations of the banking system.

The first part of this essay will be examining the cause of the financial crash followed by the effects of the crash on the economy today. The last part of the essay will be addressing the issue of why interest rates have remained low and my views on whether

The phenomenon seems to be driven by three major forces: globalization of all product and financial markets, technology and deregulation. Globalization of product and financial markets refers to an increased economic integration in specialization and economies of scale, which will result in greater trade in financial services through both capital flows and cross-border entry activity. The technology factor, specifically telecommunication and information availability, have facilitated remote delivery and provided new access and distribution channels while revamping industrial structures for financial services by allowing entry of non-bank entities such as telecoms and utilities.

Technological advancement has had a gigantic effect in the banking industry. Over the past few decades, the financial services industry has changed considerably with banking transforming from the pen and paper method to the computers and internet method. The pen and paper method took weeks or even months for the transaction to be eventually completed, and then the dramatic introduction of the computer and internet method which changed that time frame to only a matter of seconds to be completed, which reduced the amount of time and labor needed to complete a transaction significantly. Banking is considered one of the most important economic sectors with it being severely influential and responsive to any little change, whether it is domestic or international. Some extreme changes that were brought about by the development of this new technology turned into a globalized nature for the financial services industry. One stroke of a key on a computer could and would change a person 's life extensively or even have a global impact. The new technologies that were created and introduced changed how the consumers managed their money from that time on. Technology has helped to protect peoples’ hard earned money and make it much more impossible for people to be able to write out bad checks or even holding up a bank. The advancement in technology however, also came with some security risks as most things do, that could affect the money that people trusted with the bank and

o Technology: In a technology driven world, it is important that banks in the industry ‘move with the time’. With respect to the big four, these banks have now introduced internet and cell phone banking as well as banking from the ATM; making the industry highly competitive. This technology aims to make banking for the client simple and accessible from anywhere. This new technology is aimed, once again, at the medium to high-income earning clients, who have access to these technologies.

Private banking industry has changed in a very basic way, driven by many key factors such as: free competition systems, modern developments in information technology (in particular, developments of the internet), and changing demographics. Private banks now operate in an environment shaped by increasing and shifting regulations, and in markets influenced by the uncontrolled situations of the world economy and geopolitical issues.