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Factors that Influenced the Profitability of Firms in the Financial Sector - Term Paper Example

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The term paper "Factors that Influenced the Profitability of Firms in the Financial Sector" addresses the financial turmoil in the Eurozone with a specific focus on banking and financial institutions. The literature review covers some of the academic literature that gives a detailed analysis…
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Extract of sample "Factors that Influenced the Profitability of Firms in the Financial Sector"

Download file to see previous pages The theoretical model of the financial crisis has been defined and stated to give an overview of the turmoil in the entire Eurozone. Some selected financial ratios have been used from the data provided to explain the observations and the interpretation thereof for the ratios. Some of the presentations have been used to deliver a recommendation to the existing and potential investors as to the cautions they must bear in mind while making investment decisions.

The European Union has since 2009 had problems with the sovereign debt and economic crisis. This has been considered as the strongest threat to the world economy. Most analysts and investors are more worried that some Eurozone states could fail to honor their debts in a confused manner that susceptibilities in Europe’s financial sector could instigate an intensive financial crisis that could see the Eurozone enter into a prolonged economic downturn. This might eventually lead to one or more nations exiting the Eurozone. The financial turmoil has on the other hand translated into a political turmoil. Numerous national states have collapsed as a direct or indirect outcome of the turmoil and the crisis has put a strain on the relations amongst the European financial institutions and leaders (Senge, 2010; p. 139). This paper will address some of the common variables that show the extent of the financial crisis by the year 2010 and the interpretation thereof.

Currently, most of the challenges to the Eurozone concentrate on the increasing levels of public debt and the state deficits in some selected Eurozone nations. As stated earlier there are some selected Eurozone states which include Greece, Ireland and eventually Portugal which have been forced to seek funds from other Eurozone states and the International Monetary Fund with an objective to prevent lapsing on their debts. Despite the help received by the countries, there has been a consistent restructuring of their debts leading to considerable losses.  ...Download file to see next pagesRead More
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