Effect of Credit Crunch on Banking Sector in the UK - Dissertation Example

?Effect of Credit Crunch on Banking Sector in the UK It is a recognised fact that finance is the backbone of any economy and banking sector is the indispensible part of the financial segment of the economy. Similar to the other parts of the world, UK banking sector was also badly affected by the recent credit crunch that erupted in the mid 2007. This report has assessed the impacts of the credit crunch of the UK banking sector. Moreover, the reasons for such occurrences have also been determined. The most interesting fact of this report is that it will focus upon the sector that has been the origin of the credit crunch. At the initial stage of the report the readers would be introduced with the objectives and the contents. Completion of this section would lead to the review of the past research papers. Literature review has been followed by the evidences and evaluation where the data collected through interview method has been analysed. To bridge the gap between the findings of the literature review and the evidences, a thorough discussion has been undertaken. Eventually, the ultimate conclusion has been drawn from the discussion. It has been determined that during the period from mid 2007 to mid 2009, the performance of the UK banking sector had declined and the main reason behind it was the negligence of the management in the lending process. Table of Contents Abstract 2 Introduction 5 General Statement 5 Specific Statements 5 Requirement for Further Investigation 6 Purpose and Objective of the Project 6 Report Plan 7 Literature Review 8 Discussion regarding Credit Crunch 8 Time-line of Credit Crunch on Banking Sector 9 Relationship between Credit Crunch and Banking Sector (General Perspective) 11 Causes of Credit Crunch 11 Effect of Credit Crunch in the UK Banking Sector 12 Way-out of this Issue 13 Banking Regulation to Control Credit Crunch 15 Evidence and Evaluation 16 Description of the Research Process 16 16 Limitation of Research Process 17 Analysis Technique 17 Findings from Interview Method 18 Discussion 20 Conclusion 22 Applications of the Project 22 Limitations of the Project 24 Areas to be Developed 24 References 26 Bibliography 30 Appendix 34 List of Graphs Page No Figure 1.1: Base Rate Spread during the Credit Crisis 33 Figure 1.2: UK Banking Sector - Northern Rock Example 34 Figure 1.3: Business and Financial Services Growth Relative to Overall UK GDP Growth 35 Introduction The origin of the credit crunch was in the US in the year 2007. Several evidences proved that UK had also been affected due to the credit crunch (Ball & Et. Al., 2009). This report will analyse several aspects regarding the impacts of the credit crunch on the UK banking sector. General Statement The report will be dealing with the impacts of the credit crunch on the UK. It is a broad aspect hence the topic has been specified through restricting its focus only on the banking sector. Therefore, the prime research statement undertakes the analysis of the impact of credit crunch on the banking sector. Specific Statements In order to draw the ultimate findings of the research statements, the following specific statements will be evaluated ‘The Credit Crunch Explained’ ‘Credit Crunch — Banks Stop Lending’ ‘Banking Sector Timeline - From Credit Crunch to Present Day’ ‘Bankers Made 'Astonishing Mess'’ ‘UK Banking Regulation’ Requirement for Further Investigation The scope of study is huge as it encompasses the entire banking sector of the UK. Due to the constraint of time, it might not be possible to conduct an immense research. The study can be more concrete if increased number of real evidences could be included. Moreover, views of the managers or the finance managers of the banks in the UK can be taken into consideration to acquire the in-depth analysis of the topic. It is evident that the impact of credit crunch will not have similar implications to the big and small banks. Therefore, it can be stated that there is a further scope of investigating the differences of the impact in between the smaller and the bigger banks. Purpose and Objective of the Project The primary objective of the project is to determine the impact of the credit crunch in the banking sector of the UK. The concept of the credit crunch is related with the banking sector as it is based on the lending procedure. It indicates that basic concepts are needed to be conceptualised. Hence, it has been intended to demonstrate the core concepts in the initial stage of the report. Furthermore, it has been aimed to build up a relationship between the credit crunch and the banking sector to determine the degree of effect on the banking sector of the credit crunch. Report Plan For the completion of the report, dissertation format will be followed. At the initial stage of the paper, the readers have been introduced with the objective of the paper, where the general and specific statements have also been described. Moreover, the further scope of the study will be identified where?. After completion of this chapter, several past research papers will be reviewed which will provide adequate insights to concrete the study. In that phase of the report, views of the several authors regarding the credit crunch, its effect on banking sector of the UK and banking regulations to minimise the impact of credit crunch will be captured. Moreover, the strategies to avoid credit crunch will also be discussed based on the scholastic views. In the next stage, certain evidences collected through primary research from the banking sector will be drawn to understand the real scenario of the particular industry. Completion of this chapter will lead to begin the discussion which will be mainly focused on the critical analysis. With this chapter, the entire discussion will be come to an end and hence, ultimate findings will be determined in the conclusion phase of the paper. Furthermore, shortcomings of the entire study will be pointed out and along with that it would analysed whether the basic objectives are complied with. Literature Review The primary objective of the paper was to determine the affect of credit crunch on banking sector of the UK. However, in order to conceptualise the entire scenario, it is necessary to develop an understanding with each core terms and events. Therefore, it has been intended to highlight key phases of the topic such as credit crunch and affect of credit crunch at initial stage of the literature review. Next, related issues and events with the UK banking sector will be explained. In this note, it can be stated that a deductive approach will be adopted to frame the entire literature review as the discussion will be specific. Discussion regarding Credit Crunch Berger (1994) had clearly explained the term credit crunch. He had defined it as a crisis occurred by banks due to nervousness of lending money to the general people or to each other. More importantly, in that situation whenever the banks were ready to lend money, they charged a higher rate of interest. The reason behind taking this measure was to cover their risk as identified by the authors. He had pointed out few other attributes of the credit crunch, which are more expensive mortgages, complex process for pension savers and other investors. All these happened due to the wide fluctuation of the stock market. The author had further added that in the worst cases bankruptcy and repossession may take place. He had brought into light a noteworthy fact that the term ‘credit crunch’ was mostly used by the study of Federal Reserve Bank of America in the year 1967. Hence, it can be stated that the term had been invented by them. According to Howarth and King (2009), credit crunch occurs when sufficient money or credit is not available in market for borrowing. They believed that this situation may create complications for individuals as well as for organisations irrespective of their sizes as it restrict the possibilities of spending more money, pay bills or to grow. Bernanke and Lown (1991) observed that the credit crunch as the reduction in the supply of credit is unusually huge for a given stage of business cycle. Time-line of Credit Crunch on Banking Sector To conceptualise the effect of the credit crunch in banking sector, it is essential to determine the origin of the issue with respect to the time-line. According to Wisniewski & Lambe (2010), during late July or early August of the year 2007, banks stopped lending to each other because of the market fears. Here, it is necessary to mention that the market fears had arisen out of the possibilities of disclosing the potential losses from high risk mortgages in the UK. In this note, a report of Barrell & Et. Al. (2010) needs to be included, which revealed that on 9th August in the year 2007, BNP Paribas, the investment bank disclosed their incapability of paying money of its two funds. The reason behind it was that the funds were not able to value the assets of the company which led to ‘complete evaporation of liquidity in the market’. This was the most evident sign of the fact that banks were denied to do business with each other. With intention to augment the liquidity in the banking industry, European Central Bank pushed up 95bn Euros on 9th August, 2007. Even more 108.7bn Euros had been pumped in within next few days. Moreover, Fed had cut the rate to 5.75% at which, Fed lends to the banks. On 4th September of the year 2007, the rate at which banks used to lend each other had reached its peak from the last ten years records. On 22nd February, 2008, Northern Rock was transformed into public ownership and it had been accomplished when Chancellor Alistair Darling had signed off the bank’s nationalisation Wisniewski & Lambe (2010). Another noteworthy fact was that ?12 billion was pumped in as new capital in RBS. The capital was considered under the biggest right issue in the history of the UK corporate as it had a contribution of ?5.9 billion in the credit crunch. RBS was badly hit by the crunch as it had written off ?2.5 billion from its investment. On September 15th of 2008, Lehman Brothers had filed for bankruptcy. In the meantime, Bank of England had pumped up ?20 billion into the frozen money market Wisniewski & Lambe (2010). On 1st May of 2009, the UK Treasury Committee said that bankers had created “an astonishing mess” on financial system and impact of the banking crisis will be suffered for generations Barrell & Et. Al. (2010). It had been forecasted by the European Commission that the EU economies will be reduced by 4% during 2009. It had been also predicted by the commission that unemployment rate could have been enhanced by 10.9% Barrell & Et. Al. (2010). Relationship between Credit Crunch and Banking Sector (General Perspective) Figge and his fellow researchers (2009) had presented an article on ‘Liquidity Glut or Credit Crunch?’. According to the authors, credit crunch may take place due to poor financial conditions of the banks which compelled them to restrict lending. The authors had identified one interesting characteristic of the credit crunch which further describes the relationship between the banking sector and the credit crunch. The characteristic is that instead of possessing the capability of meeting the obligation of loans, potential debtors do not get loans. The authors had observed that several central banks in different countries took every possible action to control or to lessen the worst effect of the credit crunch. The authors had specifically identified that the reason of occurrence of the credit squeeze is the restriction of lending especially by commercial banks. They further stated that the reasons behind credit crunch are complicated to establish as it is difficult to isolate credit supply from the credit demand. Causes of Credit Crunch Pavel and Rosenblum (1985) had ascertained that the primary cause of deteriorating bank credit was the demand factor. Owens and Schreft (1992) had identified that credit crunch was mainly accompanied by credit controls, interest rate ceilings, ‘bank regulators to discourage banks from lending’ and ‘coercive posturing of the administrative officials’. Effect of Credit Crunch in the UK Banking Sector Owens and Schreft (1992) cited that few signs of the non-price credit crunch can be viewed if a nation is in the credit crunch whereas Bernanke and Lown (1991) believed that unusually slower growth can be observed in the credit. According to Hall (2008), crisis of the credit crunch was triggered by low quality home buyers. He had highlighted an interesting fact that during the end of the year 2007, the US banks had been compelled to write off ten billion Dollars due to the collapse of the credit related securities. The author had highlighted that as the major banks of the UK approached towards the end of financial year, the share prices of those banks were collapsed. According to the author, the reason behind it can be the fear of massive write-offs that the US counterpart of those banks had followed. The author had further added that the banks were set to disclose to the market the way they fared while issuing the ‘pre-close trading reports’ at the beginning of December or at the end of November in the year 2007. Berger (1994) had observed that several UK banks had invested huge amount in the sub-prime backed investments and as an outcome billions of Pounds were written off as losses. However, investors were not ready to buy any investments that were associated with mortgages irrespective of their quality. The author had also highlighted the fact that several banks in the UK had been utilising the investment market to finance the large amount of their mortgage business. The process is also known as securitisation. It had been found that with the spreading up the fear, sell of investment became impossible. It left a black hole in several banks. As lending completely dried up, the outcome was the credit crunch. Minamihashi (2009) had highlighted the relationship between the credit crunch and the banking sector in his article on the topic “Credit Crunch Caused by Bank Failures and Self-Selection Behavior in Lending Markets”. He felt that if the commercial banks are bankrupted, the depositors will be badly affected as they will lose their deposits. Along with the depositors, the stock and debt holders will lose their wealth. Thus, the relationship between the banks and their clients will worsen and finally the banks will face a financially troubled situation. Way-out of this Issue According to Figge and his fellow researchers (2009), the recent financial crisis exhibited that a high volume of bank leveraging may lead to destabilising of the entire banking sector. In response to the current crisis, most of the banks are trying to minimise their debt. The authors had pointed out this ‘deleveraging effort’ to be the utmost regulatory requirement. It had been observed by the authors that several credit institutions were called up to significantly stimulate their capital ratios. The authors had recommended three options to attain these objectives. Firstly, it had been proposed to raise the external equity capital. However, banks may face problems to raise the capital in this way during the period of credit crunch as no external investors will be interested to invest in banks during this period. Various sources of funding used to be dried up during this period. The second option that had been recommended to reduce the debts of the banks is to sell securities. To demonstrate the effect of the second option, the authors have mentioned about a vicious circle. According to the view of the authors, increased written downs need to be made by the banks if they sell more securities. In addition, it leads to minimisation of return-on-equity ratios and this will again compel the banks to sell further securities with the purpose to strengthen their equity capital base. The last suggested option was to stop issuing loans to reduce the amount of debts in the banks. Even the banks should not renew their loans during this period. This deleveraging process may not reduce the debt of the banks or can reinforce the equity capital base permanently. Authors believed that these three proposed approaches will be used by the banks simultaneously over few quarters to reduce the impact of the credit crunch or to contribute to the wider economy in order to improve their financial condition through lending loans to the general people and other banks. Crouhy (2008) had also demonstrated certain measures to cope up with the credit crunch. According to him, a contingency plan should be acquired to deal with such economic downturn. In his article, Alford had referred the views of Hector Sants, Financial Services Authority’s Chief Executive. Sants had warned the banks that they need to pump billions of Pounds in their capital to deal with the credit crunch. The importance of this statement had been clearly exhibited by Alford through evidence. He had cited the case of Royal Bank of Scotland (RBS). The pre-tax loss of the bank during the first two quarters of financial year 2008 was ?691m whereas the figure was ?5 billion of profit during the same period of the previous financial year. To determine the degree of the affect of credit crunch on the banking sector, the author had referred about an interview of Mr. Sants. According to Sants, the affect might not be as worse as the financial crisis during 1990s if the banks preserve adequate amount of capital. Banking Regulation to Control Credit Crunch Williams (2009) had discussed the views of Chancellor Alistair Darling regarding the UK banking regulation. In that interview, he had shared his plan to reform the regulatory system for the entire financial system of the UK. It had been observed that there was a huge blame against the existing financial system to worsen the credit crunch situation. Alistair Darling had proposed that the banks need to be subject to a closer scrutiny and need to acquire more cash reserves in case of losses. It had been also proposed by the Chancellor that regulators need to be more intrusive and the bank authority must face complex questions. Even he had further recommended authorising the regulator to take over the banks that might have failed. He suggested that tripartite system can be there, but certain transformations should be made in the role of Bank of England and Financial Service Authority (FSA). The responsibility of ensuring a stable financial system can be provided to Bank of England. Even if FSA predicts a bank which may possess immense possibilities of failure, Bank of England needs to take control of the bank’s assets. Evidence and Evaluation Description of the Research Process Besides the secondary researches, it has been also decided to opt for the primary researches in order to gain more practical leads. Initially, it has been aimed to undertake survey method and more specifically, it can be stated that mail-survey method can be the most suitable technique for this study. Thus, email-ids of the managers of certain banks and financial analysts can be accumulated and then questionnaires can be sent to their ids, but it is a lengthy process and may acquire huge time. Hence, it has been intended to undertake interview method in order to acquire an in-depth analysis of the topic. Interview method can be of several types. Those are traditional face-to-face interview, panel interview, behavioral interview, case interview, telephonic interview, group interview and others (USC Career Planning & Placement Center, 2010). Among these interview techniques, telephonic interview will be the best to deal with in this study. Since, the research work is dealt with the banking sector, it is quite evident that interview of the banking employees will be undertaken. The major banks of the UK can be shortlisted to conduct the interview procedure. Based on demand and constraints of the study, the sample size can be restricted to five interviewees. In this case, it is necessary to mention that the judgmental sampling technique will be adopted where all the samples will be selected based on the convenience of the researchers. Limitation of Research Process It is apparent that like other studies, selection of the research process for this study cannot be perfect. All research methods and sampling techniques possess certain limitations. The telephonic interview method is not able to facilitate the interviewer to see the non-verbal cues of the interviewee. Thus, it somehow restricts the interpersonal skill and understanding between both the parties. Moreover, the procedure can be time effective but not at all cost effective. Apart from cost, several technical hazards may arise during telephonic conversation and interviewer may not be able to preserve the transcript of the interview in a desired way (Xavier University, n.d.). For this kind of researches, it will be better to adopt random sampling method. Thus, biasness within the study can be controlled. More specifically, stratified and cluster sampling can be used as samples from different professions such as bank employees, investors, financial analysts and others (Westfall, 2009). Furthermore, the size of the sample is quite less. A clear picture of the impact of credit crunch on the banking sector cannot be portrayed only with this sample sizes. Analysis Technique Analysis technique will include a comparative study between the findings of the literature review and the transcript of the interview session. Almost similar areas have been covered in both the sections or it can be stated that the questionnaire for the interview method has been developed based on the topics covered in the literature review of this report. Apart from these two phases, secondary researches will also be conducted. Hence, whenever there will be differences between both the findings, secondary data will be referred to draw the ultimate conclusion. Findings from Interview Method Though the telephonic interview has been adopted for the completion of the research work, which is a cost consuming method, still certain warm up questions have been framed. The reason behind it was to get accustomed with the interviewee and to bring flow in the conversation. Both the financial analysts and the bank employees were asked the same questions. The first question was focused on the present condition of the banks after the credit crunch. According to most of the bank managers, their banks are now on the road of recovery. One of the managers had stated that there was improvement in the financial condition of the banks but it was not as good as early 2007, i.e. just before the credit crunch. According to the financial analysts, who can provide better insights about the project, the financial conditions of the banks are growing and according to their prediction, the condition can retrieve its lost conditions within the mid 2012. The second question was focused upon the relationship between the credit crunch and the banking sector. A financial analyst had considered the poor performance of the banking sector as the origin of the credit crunch. Apart from it, a bank manager also had commented that drastic changes in the lending procedure are the major causes of the credit crunch. The third question was framed to determine the effectiveness of banking regulations and the required transformation upon it. Both the financial analysts have agreed upon the fact that there are certain lacunas in the regulation and those could have been tighter towards the lending procedure. The managers were also agreeing with the fact but according to them, each bank authority needed to tighten the criterion of the lending procedure and should judge the credit worthiness of each and every individuals and organisations crucially. They further recommended bringing certain transformations in the interest rates. Subsequently the respondents were asked about the way out from the negative impact of the credit crunch. It was a common suggestion of all the respondents that the banks should strengthen its capital base. Another noteworthy recommendation from a financial analyst was that liquidity position should be enhanced by each of the banks and they should maintain a minimum amount of cash throughout the year. Lending procedure was not the only attribute of the credit crunch. The borrowing criterion may also have certain effect on the credit crunch. Hence, it had also been asked to the respondents to share their views regarding the implications of the borrowing. The views of the managers can add value in this respect. They believed that before the credit crunch, it had been the target of the bankers to make the borrowing procedure as easy as possible as they can attract more number of borrowers and the procedure involved minimum documentation and time. Discussion In the last two chapters of the report, i.e. literature review and evidences, several aspects of the topic have been discussed. The reviews of the past research papers were a method of secondary research whereas the analysis of the interview transcripts was the primary research approach. It is evident that there must be certain differences between the findings of both the analysis as one was past content whereas another was based on latest observation. Before the commencement of the discussion regarding the impact on the banking sector, it is necessary to understand the relationship between the credit crunch and the banking sector in light of literature review and primary evidences. From the overall analysis of the literature review, it has been found that most of the scholars believed that drying up of the liquidity of the banks or lending procedure to be the indication of the credit crunch. Respondents have also advocated for the same. Hence, it can be concluded that banking sector is the irrespirable part of the credit crunch. According to the interviewees, the UK banking sector is now in the recovery mode and literatures support the same. Thus, it is quite evident that the credit crunch has been settled down and its affect on the UK banking sector is reducing over the passage of time. To establish an intensified critical analysis, the performance of the banks before the credit crunch and after the credit crunch can be observed through the secondary researches. Matthews and Murinde (2007) revealed that the UK banking sector had shown the largest growth since June, 2007 and more than a third of the entire UK banking sector had contribution in this growth. Regarding the regulatory aspects of the banking sector, both the scholars and the respondents possess same view that the banking regulations act needs to be strict to control all its lacunas. In this note, the views of Peek and Rosengren (1993) can be captured. According to their view, formal regulatory actions should be place to identify the two different regimes, ‘banks those are constrained by regulatory enforcement actions and those not so constrained’. Regarding the way-out to the issues, three ways have been suggested in the segment of literature review, which mainly indicates the enhancement of the liquidity. Moreover, the three ways of gaining liquidity was sale of security, acquire external capital and stop lending. Evidences recommended that lending and borrowing procedure need to be strict. Based on these way-outs, it can be concluded that the bank management needs to control the borrowing and lending process and simultaneously they should ensure an adequate liquidity position throughout the year. In the last stage of the discussion, it will be better to analyse the implications of lending and borrowing as the bankers are recommended to effectively take care both of the issues. According to the statistics of Bank of England, the total net lending of an individual during the 2008 was ?2.1 billion which was ?1.1 billion in the year of 2009 and therefore a sharp decline in the net lending is observed. The irregularities by the banks that include improper verification of the documents before lending can be blamed for this crisis. Hence, more preventive measures need to be taken by the banking authority prior to lending (Brunnermeier, 2009). Conclusion It has been observed that the outcome of the credit crunch depicts a bitter relationship between the banks as they become reluctant to lend each other (Agentcities, 2008). From the overall analysis, it is evident that the credit crunch had badly affected the entire UK banking sector. The performances of the banks have sharply declined. The lending procedures of the banks are primarily held responsible for this issue. Even the Banking Regulation Act also comprises certain loopholes. Hence, it can be recommended to acquire strict preventive methods with respect to the lending and borrowing process. Applications of the Project The report deals with a core finance issue. Hence, it can be utilised by all students who are associated with finance based courses or want to engage with a research on banking sector. Moreover, this report can provide adequate insights on the discussion with respect to the effect of credit crunch on the UK economy. Furthermore, the candidates those are willing to enter into the banking sector of the UK, can get benefited with this research paper. Apart from these, the report may provide relevant information to the financial analysts and to the investors as the paper can be helpful to predict the future performance of the banking sector. Limitations of the Project Similar to other projects, this project also encompasses several limitations. The major constraint of this study is time. In comparison to the scope of the project, the time limit is too strict. Moreover, the study is mainly structured upon the secondary research and minimum amount of primary research had been involved. Thus, practical exposure of the study had become restricted. Apart from these, the study was only limited to the discussion based on the UK. The research paper can be made influential through adopting comparative study among several countries or among the major countries across the world to determine worst affected nation. Recent trend shows that many of the prominent banks in the UK are multinational banks that have their counterparts in other countries. Therefore, it was necessary to perform a comparative study. Furthermore, the research paper was unable to focus on each major activities of a bank such as lending, borrowing, credit card facilities and other factors as it was mostly emphasised on the lending procedure. Areas to be Developed The literature review could be ornamented with a few other ideas. Firstly, prior to the commencement of the discussion regarding the impact of the credit crunch on the UK banking sector, it was necessary to create awareness about the economic scenario of the UK after the credit crunch. Banking sector is an inseparable part of an economy. Hence, it was necessary to include the above mentioned factors. In the analysis part, the financial statement of the major banks in the UK can be evaluated along with its few other counterparts. Financial statements of banks could be analysed to gather further insight in to the research topic. Thus, the paper can be more critically examined. References Agentcities, 2008. Effect of Credit Crunch on High Street Banks. Financial News. [Online] Available at: http://www.agentcities.net/2008/03/19/effect-of-credit-crunch-on-high-street-banks/ [Accessed March 18, 2011]. Ball, P. M. & Et. Al., 2009. The Credit Crunch and Regeneration: Impact and Implications. EIUA. Communities and Local Government Publications. Barrell, R. & Et. At., 2010. Bank Regulation, Property Prices And Early Warning Systems For Banking Crises In OECD Countries. Journal of Banking and Finance, Elsevier. Berger, A. N., 1994. Did Risk-Based Capital Allocate Bank Credit and Cause a “Credit Crunch” in the United States?. Journal of Money, Credit and Banking-Jstor. Bernanke, B. S. & Lown, C. S., 1991. The Credit Crunch. Brookings Papers on Economic Activity. Brunnermeier, M. K., 2009. Deciphering The Liquidity And Credit Crunch 2007-2008. Journal of Economic Perspectives. Crouhy, M., 2008. The Subprime Credit Crisis of 2007. The Journal of Derivatives. Figge, B. & Et. Al., 2009. Possibility 2: Credit Crunch — Banks Stop Lending. A Journal of International Economic Research. Hall, M. J. B., 2008. The Sub-Prime Crisis, The Credit Squeeze And Northern Rock: The Lessons To Be Learned. Journal of Financial Regulation and Compliance. Howarth, A. & King, N., 2009. What Is The Credit Crunch? Housing LIN, Factsheet No. 30. Matthews, K. & Murinde, V., 2007. Competitive Conditions among the Major British Banks. Journal of Banking and Finance. Minamihashi, N., 2009. Credit Crunch Caused by Bank Failures and Self-Selection Behavior in Lending Markets. Journal of Money, Credit and Banking, Vol. 43, Issue 1. Owens, R. E., & Schreft, S. L., 1992. Identifying Credit Crunches. Federal Reserve Bank of Richmond Working Paper. Peek, J. & Rosengren, E., 1993. Bank Regulation and Credit Crunch. Working Paper No. 93-2. PwC, 2010. The Implications Of The Credit Crunch. Publications. [Online] Available at: http://www.pwc.co.uk/eng/publications/the_implications_of_the_credit_crunch.html [Accessed March 18, 2011]. Pavel, C. & Rosenblum, H., 1985. Banks And Nonbanks: The Horse Race Continues. Federal Reserve Bank of Chicago Economic Review. USC Career Planning & Placement Center, 2010. The Interview—Different Types. Career Planning & Placement Center. Westfall, 2009. Judgmental Sampling. Sampling Methods. The Westfall Team, Partnering for Software Excellence. Wisniewski, T. P. & Lambe, B. J., 2010. The Role of Media in the Credit Crunch: The Case of the Banking Sector. Social Science Research Network. Walayat, N., 2008. Credit Crisis Crushing UK Banks. The Market Oracle. [Online] Available at: http://www.marketoracle.co.uk/Article5087.html [Accessed March 21, 2011]. Walayat, N., 2007. UK Housing Market Crash of 2007 - 2008 and Steps to Protect Your Wealth. The Market Oracle. [Online] Available at: http://www.marketoracle.co.uk/Article1893.html [Accessed March 21, 2011]. Williams, R. A., 2009. Exogenous Shocks In Subsystem Adjustment And Policy Change: The Credit Crunch And Canadian Banking Regulation. Journal of Public Policy. Xavier University, No Date. Disadvantages. Telephone Interviews. [Online] Available at: http://www.xavier.edu/career/docs/Telephone-Interviews.pdf [Accessed March 21, 2011]. Bibliography Hay, C., 2009. Good Inflation, Bad Inflation: The Housing Boom, Economic Growth And The Disaggregation Of Inflationary Preferences In The UK And Ireland. The British Journal of Politics & International Relations. Berger, A. N. & Udell, G. F., 1994. Did Risk Based Capital Allocate Bank Credit and Cause a “Credit Crunch” in the United States?. Journal of Money, Credit and Banking, Vol. 26, No. 3. Economics Help, 2008. Tighter Credit Standards. Problems of Credit Crunch. [Online] Available at: http://econ.economicshelp.org/2008/07/problems-of-credit-crunch.html [Accessed March 21, 2011]. Economics Help, 2008. Banks for Making Poor Loans. Who is to Blame for Credit Crunch?. [Online] Available at: http://econ.economicshelp.org/2008/08/who-is-to-blame-for-credit-crunch.html [Accessed March 21, 2011]. Effros, R. C., 1997. Current Legal Issues Affecting Central Banks. International Monetary Fund. Francis, W. & Osborne. M., 2009. Bank Regulation, Capital And Credit Supply: Measuring The Impact Of Prudential Standards. FSA. [Online] Available at: http://www.fsa.gov.uk/pubs/occpapers/op36.pdf [Accessed March 21, 2011]. Gieve, J., 2008. The Credit Crunch and the UK Economy. BIS. [Online] Available at: http://www.bis.org/review/r080924e.pdf [Accessed March 21, 2011]. Gillmann, J. P. & Et. Al., 2008. Coping With the Credit Crunch: Opportunities for Corporate Banking in Europe. Mckinsey. [Online] Available at: http://www.mckinsey.com/clientservice/financialservices/pdf/creditcrunch.pdf [Accessed March 21, 2011]. Heine, C., 2009. Has the Financial Crisis Induced a Credit Crunch for Small and Medium-Sized Enterprises in Germany?. GRIN Verlag. Organisation for Economic Co-Operation and Development, 2010. OECD Banking Statistics: Methodological Country Notes 2010. OECD Publishing. PwC, 2008. Bank Lending. III – Assessing the Economic Impact of the Credit Crunch. [Online] Available at: http://docs.google.com/viewer?a=v&q=cache:h_cvr7qmeboJ:www.pwc.co.uk/pdf/Assessing_the_economic_impact_of_the_credit_crunch.pdf+&hl=en&pid=bl&srcid=ADGEESi2EWBKQte4joDxxJfif8PNWYtoQ1w-f7ujbWm3XGrJs5UFbAttqmboPOs2MeugQVdPC-GpB2fzaL-FWcZg2IodfXgdeTW47wgz-EfNkZuP-w1H5cqu0ZBMBSAg-zCWrCVn-obQ&sig=AHIEtbRROScOeAXeZh8QIJd2a3grOVDZbw [Accessed March 21, 2011]. Pritchard, A. E., 2007. Credit Crunch Alert over UK Economy. The Telegraph. [Online] Available at: http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/2820546/Credit-crunch-alert-over-UK-economy.html [Accessed March 21, 2011]. Singh, D., 2007. Banking Regulation of UK and US Financial Markets. Ashgate Publishing, Ltd. The Thrifty Scot, 2007. The Effects of the Credit Crunch In The UK. Credit Cards. [Online] Available at: http://www.thriftyscot.co.uk/102007/the-effects-of-the-credit-crunch-in-the-uk.html [Accessed March 21, 2011]. The Telegraph, 2008. Sitting Comfortably? The Credit Crunch Affects You Too. Personal Finance. [Online] Available at: http://www.telegraph.co.uk/finance/personalfinance/savings/2787472/Sitting-comfortably-The-credit-crunch-affects-you-too.html [Accessed March 21, 2011]. Varadi, A., 2009. The Credit Crunch Conspiracy. AuthorHouse. Walker, G. A., 2001. International Banking Regulation: Law, Policy, and Practice. Kluwer Law International. Wadsworth, J. E., 2006. The Banks and the Monetary System in the UK 1959-1971. Taylor & Francis. Appendix The important graphs related to the UK banking sector that can provide a clear scenario of the sector. Figure 1.1: Base Rate Spread during the Credit Crisis Source: (Walayat, 2008). Figure 1.2: UK Banking Sector - Northern Rock Example Source: (Walayat, 2007). Source: (PwC, 2010). Read More