N1554 FINANCIAL INSITITUTIONS AND MARKETS ASSIGNMENT OUTLINE.
Simple grammar and words
N1554 FINANCIAL INSITITUTIONS AND MARKETS ASSIGNMENT OUTLINE.
Your report can be based on one of the four topics discussed below. The report should be typed on A4 paper, Times New Roman, 12 point font, aligning text to both left and right margins, double spacing and should be no more than 1,000 words, excluding the reference page(s), bibliography and appendices (if applicable). Marks will be deducted for excessively short or lengthy reports. Separate word counts should be displayed on the first page of the coursework.
REPORT QUESTION. Discuss and critically evaluate one of the following questions/statements: 1. What impact did “credit crunch” effect have on the UK stock market during the 2008 recession?2. Analyse impact of securitisation on banks’ liquidity and developments in the field of global securitisation in the post 2008 recession period.3. Can Vicker’s regulation in the UK and Volcker’s rule in the US prevent a next financial crisis?4. What is the role of CRA’s in debt capital markets and do these institutions have any conflicts of interest?
PLAGIARISM
“Plagiarism is the practice of presenting thoughts, writings or other output of another or others as original, without acknowledgement of their source(s).” All material used to support a piece of work, whether a printed publication or from electronic media, should be appropriately identified and referenced and should not normally be copied directly unless as an acknowledged quote. Text translated into the words of the individual student should in all cases acknowledge the source. For further information please see:
http://www(dot)sussex(dot)ac(dot)uk/s3/?id=35&jquery=off
Before submitting the essay, you should check through it to ensure that:
any material that has been identified as originally from a previously published source has been properly attributed by the inclusion of an appropriate reference in the text;
direct quotations are marked as such (using “quotation marks” at the beginning and end of the selected text); and
citations are included in the list of references.
CREDIT CRUNCH
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CREDIT CRUNCH
Impact of Credit Crunch on the United Kingdom Stock Market during the 2008 recession
"Credit crunch" is a term used to refer to the decline in activities of lending by banks and other financial institutions due to a severe lack of funds for an onward loan to retail and corporate customers. This report will delve into the effects of the recession-induced credit crunch in the United Kingdom's capital markets, such as the London Stock Exchange. The financial market crisis of 2007 to 2008 had enormous effects on the economy at large. The property market bubble burst to cause banks to convert huge sums in debt to bad debts in regards to loans advanced towards mortgages. This led to the capitalization of banks in the stock market to shrink significantly, by more than twice as much. The phenomenon led to considerable occasioning of losses on the shareholders of banks and other financial institutions.
Credit rating
The financial institutions and banks that were severely affected by the credit crunch following the recession experienced a significant shrinking of their market capitalization and their subsequent credit rating. The sense that they were no longer able to lend money made them unattractive investments in the stock market. As a result, their share prices plummeted, leading to an overall contraction of the United Kingdom stock market. This caused massive loses for numerous shareholders of the banks and other financial institutions since they were forced to sell their stocks at a lower price compared to what they had earlier bought them for (Lawrence 2010). The whole situation and its effects were even more severe for the banks and other money lending organizations.
Reduced cash for investment in bonds and shares
The reduced credit rating also meant that these banks could no longer borrow from bigger international banks like Goldman Sachs at lower interest rates for onward lending to retail and corporate clients. In consequence, the banks' loan book and businesses shrank significantly. This translated to less profitability amongst banks in the United Kingdom stock market as well as the lack of access to funding in terms of debt by corporations listed on the London Stock Exchange (Brunnermeier 2016). This compounded the recession even further as there was no cash to do business from both debt and equity. Thereupon, the nation's bond on its capital market was also greatly hampered, given that relationships are predominantly purchased by banks and other financial institutions which have large pools of funds to be able to fund them. The credit crunch left the lenders with nothing to invest in the bond market starving off governments and other companies which were seeking to raise money through bonds of funds, ban. In general, due to lack of funding, banks, related financial institutions, investors, shareholders, and the citizens could no longer run their businesses as usual.
Stock market free fall
The panic caused by the recession and the subsequent credit crunch effect brought about panic selling across the globe and prominently in the United Kingdom and the United States of America. This made the shares of almost every...
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