Are the European banks riskier than the US competitors for the period Essay

Are the European banks riskier than the US competitors for the period 2002-2007 yang - Essay Example The crisis was caused due to the failure of many banking sector across the world. The firms which had failed in UK allowed their businesses to overextend through risk taking and excessive leverage, over dependence on risky product streams like derivatives or buy-to-let mortgages, poor decisions of management in respect of acquisitions, over reliance on wholesale funding. The project describes the position of European banks and its US competitors during the period of global financial crisis and which banks were more riskier during that time. Introduction Unprecedented innovation and growth have been seen in the financial sector over the past two decades as new products and higher returns have been sought by the investors in the era of low interest rates. Banks also had an obligation to understand the risks to which they are exposed. The complexity of certain financial instruments and the interconnected developed global market often did not provide well understanding of the dangers inv olved with the banks, its investors and boards, central banks and regulators (HM Treasury, 2009). The risk models of banks were proved as flawed which was based on incomplete application of principles of finance. It was believed that risks had been widely distributed throughout the financial system by the method of securitisation but it proved as mistaken and risks posed by global increase in leverage were under-estimated. The remuneration policies of banks have contributed to the riskiness of financial system as they focussed too much on short term profit. Market discipline also proved as an ineffective constraint on risk taking in financial markets (Independent Commission on Banking, 2011).There were certain deficiencies in the corporate governance of banking institutions. The board of banks failed to understand this and they got prone to the risk management processes of their firms. The senior management also did not question on the sustainability and nature of achieved higher re turns. Many institutional shareholders were not able to monitor the effectiveness of senior management of banks nor did they challenge the decisions of board of bank. Generally, the banks and investors rely on the assessments of credit rating agency but they did not supplement the ratings with conclusions from the view point of their own analysis. The central banks and regulators, commentators and other authorities underestimated the risks built up in the financial system. The banks were exposed largely to the vehicles of off-balance sheet financing and lack of transparency. Literature Review Financial crisis of US bank The global economy was experiencing unprecedented level of financial turbulence. This was triggered by a downturn in US housing market, particularly the sub-prime end of the market. The instability grew steadily following the collapse of Lehman Brothers, an US investment bank. Initially, the investors realised that they have misjudged the risk in securities linked to low quality US sub-prime mortgages. Consequently, prices fall leading to heavy losses to the holder of assets. Then the investors became concerned about which of their counterparties are exposed to these losses and began to charge a higher risk premium to

Harlem Renaissance Essay Example | Topics and Well Written Essays - 1500 words

Harlem Renaissance - Essay Example This huge group contained people from every aspect of life and of different occupations, particularly the musicians and those who study literature. There was also unskilled labor that was forced to move in big cities due to the problematic situation caused by war. Hence there was actually a form of migration by the Negro community from their hometowns to big cities as there were fewer opportunities in their local areas. This whole situation was named as the great migration which started in 1910s originally but resulted in a great New Negro Movement, or the Harlem Renaissance. During this time, the blacks from the American community came in front and took every respectable position in the society of whites by their skills and education. Harlem became the centre of black professionals who belong from every class of the society and started to recognize themselves and their community in the post slavery culture of US. Since that time, Harlem has the dominant population of blacks1. In rea l meaning, Harlem Renaissance originated from the participation of Negros in local theatres. Before that, it was a common conception that black faces and skins cannot convey the human emotions as good as a white face. This participation of Negros in plays boasted their moral and the event was termed as the most important event for Negros of US of their entire history. Another mild stone was the war poems written by different white poets which were taken by the Blacks as the right time to end the unequal treatment they face from the white community and the racial injustice. The whole movement was led by first African American Rhodes scholar, Alain Locke, a professor of philosophy at Howard University at that time. The movement blossomed in 1920s, particularly in the year 1925, when there had been a flood of literary articles and different artistic performances by the African Americans, who drew attention of white intellects to their culture and their participation as active and benef icial members of the society2. The Harlem Renaissance was indeed a blossoming time for the African American culture, particularly in the field of creative arts. It was considered to be a literary movement which laid the basis for all later African American literature and had noteworthy impacts on the overall black literature. Many famous names are attached with the movement, which include Jean Toomer, Langston Hughes, Countee Cullen, Jessie R. Fauset, Claude McKay, Arna Bontemps, Rudolph Fisher, Alain Locke, Wallace Thurman and Zora Hurston. All of these African American novelists and writers evoked the spirit of pride into black community with their writings and literary works. Some of the above persons publish journals of their own which were full of black literature depicting the black culture and their lives. In this way, several people contributed their best towards the revival of black literature and its introduction to modern society3. The Harlem Renaissance was not only limi ted to the publications and literature activities. From its beginning it was associated with every form of art, whether it is music or some other form of creative art. The Negro migration from the south towards north during the war times was not only due to earning purpose, but also to find a better place where skilful and intellectual people can really flourish apart of their color and race. Harlem provided