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Securities activities of banks class - Essay Example

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In the last decade, the effects of the economic recession have been enormous and turbulent to businesses globally, only second to the great depression of 1930. Giant financial institutions have…
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Download file to see previous pages According to the 2008-2012, Global Economic Crisis report, interplay of a number of factors may have triggered this crisis. Some of those factors include high-risk mortgage lending rate, inaction by the financial systems’ regulators to enforce available financial prudence acts and laws which created a loophole that allowed some financial players to act and lend imprudently, untrue credit ratings given to investors by some financial system players to woe and attract investors, and valuation and liquidity problems in the banking systems of global economies. Its turbulences and ripple effects have been heavily felt by virtually all economies, both great and mighty, and fairly considered small ones.1
A number of research have been done in the line of global economic crisis delving into what may have been underlying factors that led to great global economic recession. Commissions of inquiries into causes of the global financial crisis have been constituted and reports have been raised on the possible factors that may have triggered the crisis. Levin-Coburn Report in particular investigates on causes of financial crisis and concludes that, the crisis that plunged many economies into collapse was avoidable if due diligence was followed by major players in the banking systems, especially the ones in the mortgage lending section. Prudence in mortgage lending and adept adherence to the financial regulations and acts could have certainly saved many financial economies from collapsing under the harsh effects of the global recession. To avoid failures by banks insinuated as possible reasons for the global economic crisis, financial regulators have tightened the existing regulations on lending, liquidity and reserve requirements among others, and banks are now keener in how they handle credit risks.
The concept of Asset securitization as a prudent risk management tool is finding global acceptance and many financial institutions concede that it could have ...Download file to see next pagesRead More
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