The Banking and Monetary System Assignment
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Added on 2020-07-22
The Banking and Monetary System Assignment
Added on 2020-07-22
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MONEY AND BANKING
TABLE OF CONTENTSESSAY.............................................................................................................................................1REFERENCES..............................................................................................................................13
ESSAYTo ascertain the banking and monetary system in various nations there has been maininfluence of banking authorities to bring the recession and financial crisis. Moreover, in thepresent study there will be discussion based on Federal bank in US and the banking policiesimplied by them. Moreover, there has been adequate analysis through various operation such asGDP rates, Inflation etc. Thus, in order to improve the financial conditions there are various filedwhich are needed to be improved by the government (Travis, Harris and Larson, 2017). Therehas been various impacts of such as huge level of monetary circulation in the market. Consumerswere having interest in investing the money over long term investment plans as the loans andinterest rates were comparatively lower. The banks allowed lower rates as they wanted to meetthe challenges and competition in the market. The impacts as well as influences of financialcrisis were direct and indirect over such economies.As per analysing the GDP rates during the period 2000 to 2017 there has been hugevariations. Thus, during the crisis there has been downfall of economy which are impacted overthe rise in the prices of commodities (Aaronson and et.al., 2018). Moreover, the main reasonbehind the crisis was excessive sub-prime mortgage has been facilitated in the market with lowerreturns. Thus, it has negatively impacted over the governmental reserves (Ruhl and Willis,2017). Banks become bankrupt as there were no money left. It also affecting the increment ofrises of commodities which has bound the consumers in not making expenses which results indemolish of huge numbers of small businesses (Bernanke, banking crashes andrecessions,2013). Therefore, to analyse the GDP and inflation impacts over the rate of return of bankingsector the below listed table will be helpful in analysing the impacts of financial crisis.Moreover, in relation with analysing the impacts of Global financial crisis there has been hugenegative fall of the GDP rate of the country. Thus, due to such impacts over economy as itaffects the small scale businesses. Thus, it has effected over reduction in the economic growthand the circulation of money in the market. There has been reduction in the consumer confidenceindex numbers which emphasis over the negative trade practices (Delis, Hasan and Mylonidis,2017). The governmental policies to overcome with the impacts of GFC in the nation there canbe reduction in the operational activities. Thus, at the time of great depression there has beenincrement in the mortgage level. Moreover, people started taking loan and making investmentsinto the real estate and properties which were having the negative impacts over the increment in1
the level of loans and mortgaged were grant to the consumers. There has been various impacts ofsuch as huge level of monetary circulation in the market. Consumers were having interest ininvesting the money over long term investment plans as the loans and interest rates werecomparatively lower. The banks allowed lower rates as they wanted to meet the challenges andcompetition in the market, Thus, due to lower interest rates there will be less collection of moneyand at the time of global financial crisis impacts over the national economy, there is no moneyleft with the banks (Buyl, Boone and Wade, 2017). There has been huge reduction in thegovernmental reserves and funds which has eventually lowers down the revenue of citizens.There has been negative impacts over the growth of economy. Thus, the per capita GDP has thenegative outcomes which indicates that during such period the small or medium sizeorganisations has negative impacts of the global financial crisis (Laux and Rauter, 2017). This inturn reduces the economic level as well as living standard of the people.It has been observed here that the speculative boom was extended due to derivatives inthe global financial crisis which was not in at the time of great depression. The impacts of greatdepression was originated from United state there has been major fall in the stock value ofvarious industries. Therefore, During such a phase there has been reduction in the prices of theshare values of the firm which indicates the downfall of the economy (Bai, Krishnamurthy andWeymuller, 2018). There are various entities which were bankrupt and have no capital amount tooperate their business activities. Moreover, it has affected the banks with not money to grantthem from better operations in the time. Similarly, the global financial crisis has impacted overthe nation as per the poor banking policies of the government. To meet the competition theprivate and public sector of financial authorities has facilitated the loans in the market at lowerreturns which indicates economic crisis (Irani and Meisenzahl, 2017). During such period thereare various issues arises such as inflation, fall of GDP rates, unemployment, fall in nationalincome as well as economic rates. The liquidity and current ability of nations has beenchallenged through such variations in the economy.The banks in United States has started making the excessive Sub prime loans to theconsumers at very lower rate of return. Thus, the motive of these financial institution is to havebetter efficiency as to meet the challenges in the market. It has impacted over various economiessuch as developing and developed (Aaronson and et.al., 2018). The impacts as well as influencesof financial crisis were direct and indirect. Moreover, due to such regards many of the small2
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