Business Research Report: Analyzing the Potential Impacts of Economic Recession on Private Banking Perspective

Running head: BUSINESS RESEARCH REPORT: Analysing the potential impacts of the economic
recession from private banking perspective
BUSINESS RESEARCH REPORT: Analysing the potential impacts of the economic recession from
private banking perspective
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BUSINESS RESEARCH REPORT: Analysing the potential impacts of the economic recession from
private banking perspective
Table of Contents
Section 1: Introduction..........................................................................................................................2
Section 2: Literature Review..................................................................................................................3
Section 3: Methodology........................................................................................................................6
Section 4: Discussion and evaluation.....................................................................................................7
Section 5: Conclusion and recommendation.......................................................................................12
Reference list.......................................................................................................................................14
Appendix.............................................................................................................................................18

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BUSINESS RESEARCH REPORT: Analysing the potential impacts of the economic recession from
private banking perspective
Section 1: Introduction
Economy of Spain and other developed nations in modern days are facing harsh face of
recessions and the prolonged growth of the recession is having deep impact on the economic
performances of these countries. The setting of the project will definitely highlight the indulgent of
the financial problems that the Bankinter bank is facing in Spain. This is important in the sense that
currently financial problems have been uprising within the country. On the other hand, the
development of a better financial environment will be helpful for the development of investments.
The main objectives of the study are to highlight the policies and strategies that most of the
government will have to take so that Bankinter bank can minimise the risks of financial problems.
The main aim of this project is to highlight the potential impact of the economic recessions on the
performances of economies like Spain and how the private banks like Bankinter is taking policies in
order to minimise the effects of recession. In country like Spain, the effects of harsh and prolonged
recession is basically increasing the unemployment rate and lack of investments in the housing
industry. The main financial crisis that the Spanish economy is facing is in the form of deregulation
of real estate mortgages in US. In 2007, the sub-prime loan emerged and it started to create the
financial problems by high margin.
The rising price of oil and food price made the financial crisis worse than before. On the
other hand, a rumour was heard regarding interbank loan and loan losses were building up and the
global financial company Lehman brothers collapsed. The main purpose of choosing this study is
mainly because of the fact that financial market of Spain is vast in nature. Through the development
of better policies, it is important to estimate the overall potentiality of the country in managing the
financial perspectives that will improve the performance of the overall economy. Millions of houses
in Spain are remaining unsold as the banks are not getting enough cash to provide the mortgage fees
to the brokers. During mid-1990, the Spain even allowed a number of temporary contracts in order
to reduce the unemployment in the economy. In order to do so the consequences was not up to that
mark as after this initiative huge amount of unemployment in the economy has increased.
The reasons for choosing the topic is that it will highlight the indulgence of the various
policies that will not only increase the development of financial conditions but will also increase the
resource utilisation that in turn will benefit the spread of business in the Spanish economy. Through
the development of the financial conditions of Spain, more amounts of investments will come into
the economy.

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BUSINESS RESEARCH REPORT: Analysing the potential impacts of the economic recession from
private banking perspective
Research Aim
The main aim of this project is to identify the impact of recession that is falling on the
financial performances of private banks and companies like Bank Inter is facing stiff challenges in
continuing their operation. The aim of the study is to identify the main factors that are going to
increase the operation of private banks and the policies they are going to take in order to tackle the
impact of recession. However, the study will mainly aim to resolve the problems that are going to be
faced by the company regarding the financial issues. Moreover, the study is aiming to solve the
issues that are faced by Spanish economy as characterised by prolonged session of economic
recession and most of the business collapsed.
Research objectives
 To identify the impact of recession that is falling on the performances of Bank inter
Company and the areas that the banks they should take during recession.
 It is important for the company to increase the level of policies that is actually helping the
economic and financial activities that are beneficial for counterattacking policies of Spanish
economy.
Section 2: Literature Review
In the modern business world, the development of banking systems and other financial
institutions, it is important to implement better technologies of banking. According to López-Sala
(2017), the Spanish economy started to grow at high pace. From mid-1990’s, the growth was
withstanding a steady growth and it continued almost for a decade. Incorporation of the Spanish
goods was coming into Spanish economy. Development of goods based on the ethnic, national and
religious diversity. The Spanish government has focussed heavily on the construction of the
hospitality industry, tourism, services, intensive agriculture and transportation. However, the
economy did not focused on the development of the banking sectors. In the past few decades the
immigration in the Spanish economy has increased by huge margin. Due to more complex situation
in the immigration policy, the development of the banking sectors is more important so that the
development of the future perspectives can be achieved. On the other hand, it has been seen that
Spanish economy was characterised by tolerated irregularities.
As opined by Salmon (2017), the Spanish economy witnessed the highest economic growth.
In the effect of the great recession, most of the business in the Spanish economy collapsed and the
development of the business was facing issues in the form of deregulations and bank collapse.
Responding to the situations of Spain, it is important for most of the economists about the

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BUSINESS RESEARCH REPORT: Analysing the potential impacts of the economic recession from
private banking perspective
development of the business and they have highlighted three main factors behind the decline of
Spanish economy. On the other hand, the development of Trichet’s claim in the short run was full of
negative externalities. The claim was mainly responsible for the development of unemployment and
high price rise in the economy. Secondly, all the countries that were present in the European Union’s
started to feel the pressure of contracted business that has given rise to the development of the
business (Agnese and Hromcová, 2018). Most of the business was facing collapse and the internal
demand was increasing due to the paradox of thrift. On the other hand, the macroeconomic
conditions were depleting because of great depression. Along with this, most of the government
policies were aimed at cutting out the public spending thinking that it will boost up the consumer
demand. Both public and government misjudged the economic situations and forecasted that future
spending will increase and they started to spend less in the current period. People were fearing of
losing their jobs rather than behaving in a rational way (Aiyar et al. 2016). Through the development
of current spending, the consumers are not willing to determine the food baskets according to their
price prevailing in the economy. Rather they thought of minimising the tax burden and they thought
of minimising the trade gaps. This has created certain problems for the company like Bankinter as
they were facing huge problems in collecting the revenues. Through the development of low
profitability, the company was facing problems in the investment opportunities.
The development of the policies in order to mitigate the global economic crisis that the
Spanish economy was facing was quite similar to the policies that were mainly designed during the
period of 2008-2009. Government spending was about 35% of the National GDP and the three years
surplus was followed. In spite of such efficiencies, the public spending that was part of the GDP was
quite low in nature compared to other European countries. In the stability plan of 2007-10, the GDP
was forecasted at 3.1% in 2008, 3% in 2009 and 3.2%% in 2010. On the other hand, the general
budget of the state for 2008 was forecasted to be around 3.3% (Álvarez-Díaz et al. 2015). The
economy of the Spain was focusing on the development of investment along with the development
of GDP. In order to bring the attention of the investors, the government took many stimulus
packages that were mainly designed to underpin demand and the monetary policy was aimed to
compliment the development of the business. On the other hand, the development of the business
will definitely increase the investment opportunities that will not only increase the investment
opportunities but will also ignite the government to indulge deeply the fiscal policies. On the other
hand, the total valuation of the fiscal policy taken by the government was around €18 billion for the
two years. It included a refund of €400 in 2008, and 2009 estimated the treasury cost of €6billion
(Andreeva and Sviridov, 2017). The development of the resource utilisation will not only highlight

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BUSINESS RESEARCH REPORT: Analysing the potential impacts of the economic recession from
private banking perspective
the involvement of the business stakeholders and the government policies but will also define the
roles played by private banks in minimising effects of recession.
Antelo (2017) opined that in the Spanish economy, the unemployment and the inflation rate
was increasing by huge margin. Through the development of the unemployment and inflation rates,
the house price was increasing and the development of the government policies will be looking
forward to increase the better investment facilities. The private banks are facing the problems
mostly during the period of recession as they has to depend entirely on the central banks for any
kind of repo rates and discount rates. They also have to depend entirely on the central banks,
regarding the loanable conditions that will be highlighting the development of better strategy of
operations. Most of the private banks do not have huge amount of accessibility to the development
of the business but they are bound to get the penalty for any kind of misjudgements that are done
towards the customers. From the point of view of better strategy management of the economy, the
private banks are not being able to work efficiently in Spain.
According to De Cosand Moral-Benito (2016), the fiscal policies that are taken by most of the
companies to indulge the functional ability of the banking institutions. Through the development of
fiscal policies most of the government contracts the goods manufacturing and they tend to minimise
the burden of the tax. But most of the modern economists have claimed that increasing goods
manufacturing will automatically help the economy in improving the situations of the economy. Due
to inheritance of cultures and heritage of the Spain economy, the government is trying to minimise
the gaps in the investments. During the period of the recession, the development of the business is
problematic in the sense that most of the companies will be laying off the employees as the cost of
operation increases for the economy. It is important for the countries in the developed nations, to
increase the trade and commerce that will be helping in the development of the business in the end.
Through the development of the trade and commerce, it is important for the companies like
Bankinter to increase their resource allocations. Most of the private banks tend to remove the
development criteria that are initially acts as the benefit for the customers.
Bentolila et al. (2017) opined that due to dryness of the capital in the economy of the
developed nations has taken the initiave of mostly by the government. Most of the policies have
seen that the development of the business in the private banking sectors that will be facing more
problems in the sense that drying of the cash will be helpful for the development of better strategies
in the form of better marketing of the goods. Economic recession is the event that occurs for the
short time. Its consequences include high unemployment, reduction in the economic activity and
reduction in the income that have a long lasting effect. The interest rates in the economic recession