The Financial Crisis – A Case Study
The Financial Crisis – A Case Study.Enterprise and Social Responsibility
Introduction:
The Moral dilemma of financial crisis or banking reforms do not start from 2007 but since 1986’s big bang policy of merging investment banks, building societies, and high street banks (Kynaston, 2011). Taxpayers’ money without public consent but with aim of general benefit was put as subsidy to the financial system which faced many booms and made London as international financial hub until proving too big to fail during recession and hence creating dilemma of public rights because banks had moral hazard. Now government trying to save both financial system as well as taxpayers’ money through banking reforms whom authenticity could only prove with time.
Question 1:
Miles (2012) defines stakeholders as individuals or groups who or to whom organisations have obligations and rights and normative rationale for moral duties. The harms and benefits analysis of some of external and internal stakeholders is as follows:
The State:
The banks became too big to fail because they were given liberty to enjoy monopoly which put sovereignty of state at stake and government had to bail them out (Reynolds, 2014). Till 2009 government put £850 billion (BBC, 2009) to save banks and as a result budget deficit went to record £90 billion only in 2009 (BBC, 2009).Banking reforms give control back to government and banks can be put on trial and would not be bailed out in future, so trust on financial system would be sustained and public money would not be at risk.
Public:
The ring-fencing law is a relief for public that their deposits and tax money would be safe (GlobalPrison, 2011). The aftershocks of previous recession can stay for years in term of high unemployment and inflation.
Business:
Banks will not lend money easily and also cost of borrowing would increase which would make it difficult particularly for small enterprises and new start-ups. Business sector is being ignored under
Introduction:
The Moral dilemma of financial crisis or banking reforms do not start from 2007 but since 1986’s big bang policy of merging investment banks, building societies, and high street banks (Kynaston, 2011). Taxpayers’ money without public consent but with aim of general benefit was put as subsidy to the financial system which faced many booms and made London as international financial hub until proving too big to fail during recession and hence creating dilemma of public rights because banks had moral hazard. Now government trying to save both financial system as well as taxpayers’ money through banking reforms whom authenticity could only prove with time.
Question 1:
Miles (2012) defines stakeholders as individuals or groups who or to whom organisations have obligations and rights and normative rationale for moral duties. The harms and benefits analysis of some of external and internal stakeholders is as follows:
The State:
The banks became too big to fail because they were given liberty to enjoy monopoly which put sovereignty of state at stake and government had to bail them out (Reynolds, 2014). Till 2009 government put £850 billion (BBC, 2009) to save banks and as a result budget deficit went to record £90 billion only in 2009 (BBC, 2009).Banking reforms give control back to government and banks can be put on trial and would not be bailed out in future, so trust on financial system would be sustained and public money would not be at risk.
Public:
The ring-fencing law is a relief for public that their deposits and tax money would be safe (GlobalPrison, 2011). The aftershocks of previous recession can stay for years in term of high unemployment and inflation.
Business:
Banks will not lend money easily and also cost of borrowing would increase which would make it difficult particularly for small enterprises and new start-ups. Business sector is being ignored under
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