Financial Crises of UK

MANAGERIAL FINANCE

THE INTERPLAY OF AGENCY AND STRUCTURE IN THE UK
FINANCIAL CRISIS
Financial crises of UK put a bad and down impact on the country. In financial crises all the
value of the assets goes down, so nobody invest money in market. By the effect of this UK financial
status goes down rapidly. Financial crises affected the country many times like in 2008 and then
2015. On 2015 UK government launch and collect fund for the new houses by the crises nobody
able to purchase all these things (Gomulya and Boeker, 2015). The funding from shareholder goes
down and these things affect the market. After all the government of UK raise the prices of each and
every product so it is hard for poor people to survive.
Reason behind financial crises in UK
UK wants to spread their business so they join US banks in 1970. In this they started the
business of selling models to third parties on their own risk. After some time the capital changes
make some issues, by this us government stop investing in UK government. This is the main reason
of financial crises (Ma, Anderson and Marshall, 2016). In the other hand the reason behind the
crises is UK bank is not able to provide too much money to their creditor. In financial market the
prices of houses and speculation goes high.
Causes of the financial crisis
Leverage- Excess leverage is one of the major reason behind the financial crisis. It means if
leverage of the organization goes beyond the balance sheet than it raise the probability of financial
crisis. Company does not have any transpiring account for leverages so anybody get information
from this. The only solution to reduce the rescission is get higher capital, improve accounting and
transparency.
Tax and subsides- Tax policy should be relevant for all the people. Government need to be
adding some taxes like financial transaction tax, speculation tax etc. Along with this, tax subsidies
encourages the long term financing which affects the financial position of the organization and
creates the situation of financial crisis. Encourage the level of debts by this the level of money
increase (Lusztig and Schwab, 2014).
Conflicts of interest- In this some agencies try to know about customers desires by his they
can change the rate of interest. In case, if clients have some desire related to banking system so they
can change it.
Too big to fail- Too big and complex organization cannot manage all operations in effective
manner. So, it leads negative impact on overall financial and investment position of the
organization. So, it is also considered as major reason behind the financial crisis of an organization.
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