Financial Crisis of 2008 in United States

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FinancialCrisis of 2008 in United States

FinancialCrisis of 2008 in United States

Thestrategic position that most of the banks in the US hold within thefinancial system requires that necessary appraisal of theirperformance be carried out in regards to the global crisis. Eventhough the research done by Reinhart &amp Rogoff (2011) have pointedthe causes of the global financial crisis to be pressure to raisefunds and contraction of credit, other research works done havepointed out that the problem was mainly because of a liquidityproblem and the inability of the stock market to raise new funds. Owing to the lack of clarity, this study forms its background.

Hypothesisstatement

Thepaper examinesthe causes and the effects of the financial crisis of 2008 on theperformance of United States banks.

Thestudy explores this topic with the intention to determine the degreeof the impact and find out the various options available that can beused to mitigate the effect as well as ensure that the problem doesnot recur in future. ResearchMethod

Inthis study, the survey research design is used. The samplingtechnique applied is the systematic sampling method that will entailthe selection of the nth subject or item from a population that isserially cited. In instances where n is any number, the subjects orunits involved are determined by the division of population and therequired sample size.

TimeFrame and Case

Thisstudy will incorporate a period of 6 years. The period under study isfrom the year 2004 to 2009. The case studies will be limited to WellsFargo, Citigroup, and HSBC. The cases are subject to the samplingmodel that is applied in the methodology section of the study.

Independentand Dependent Variable

Forthis study, the research employed the use of secondary data thatrelate mostly to loans and advances, the various investments insecurities and customers’ deposits which were the independentvariables. On the other hand, the dependent variable is the bankperformance.

ProjectValue

Bydoing the study, the causes and the effects of the financial crisisof 2008 on the performance of United States banks is understood. Moststudies that have been carried out previously have not been focusingon the effect on the performance of US banks instead, they have beenmainly focusing on the role that the banks played in causing thefinancial recession.

Thisstudy is critical to the academic field as it brings out a whole newdimension to the project itself. It injects a new breath of academicsinto the study. The findings of the study are also relevant to thedifferent banks and their management as well as financialstakeholders involved. The results can help in policy formulation andadvice on the right policy measures required within the bankingsector.

Causeand Effect Relation

Todetermine the cause and effect relationship that exists, the studyemploys the use of multiple regression analysis. Through theapplication of this analysis method, there is a reflection of theexplanatory nature of the variables that are being studied. Theevaluation criterion that is applied helps in determining if theestimates are meaningful or statistically satisfactory to theinvestigations being done. In expounding on the cause and effectrelationship in this study, different criteria are used, and theyinclude R2, F- statistic and t-test. Upon doing the test, it emergesthat the financial crisis of 20078 had adverse effects on banks.

References

Reinhart,C. M., &amp Rogoff, K. S. (2011). From financial crash to debtcrisis. TheAmerican Economic Review,101(5),1676-1706.

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