Preventing Another Global Economic Crisis Term Paper

Pages: 13 (3917 words)  ·  Bibliography Sources: 15  ·  File: .docx  ·  Level: Doctorate  ·  Topic: Business - Case Studies  ·  Written: July 6, 2019

SAMPLE EXCERPT . . .


Theoretical or Conceptual Framework

The theoretical framework used here is rational choice theory, which posits that individuals or organizations make decisions based on the weighing of costs and benefits. The key concepts in this theory are that in order to effectively make rational choice, one must know the costs and the benefits as they are in reality and not only as they appear in one's mind. If one is not confident about the costs and benefits, one cannot proceed effectively in the decision- making process.

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The framework guided the research decisions, including the development of the research problem statement, purpose statement, and questions, by framing the underlying idea at the heart of the specter that is the over-leveraged industry, as through the concept of weighing the costs and benefits. (Dimon, 2017) and Lupton 2018), When investors put money into equities (risk assets), they do so because they judge the benefit (ROI) to outweigh the cost (price and downside risk). The problem emerges when one inaccurately assesses one, the other or both-i.e., when one does not accurately understand the benefits or does not properly assess the costs. By examining the industry through this perspective, the problem and purpose organically emerged, and the research questions appeared as a natural response to wanting to understand whether those in the industry have an accurate sense of the cost-benefit ratio of investing in markets in today's economic climate.

Term Paper on Preventing Another Global Economic Crisis Assignment

International banks cannot be confident unless they understand the risks of leveraging and having enough liquidity to meet needs should a situation like 2007-2008 arrive again. Knowing the costs and benefits of any action has become increasingly difficult, however, as the governor of the Bank of England, Mark Carney recently pointed out, noting that global issues a "have made it more difficult for central banks to set policy in order to achieve their objectives" (Giles, 2017). In other words, awareness of what is going on in the global economy has made it challenging for banking leaders in the community to know how to adjust their policies and procedures. Likewise, as Van Lerven (2016) notes in reference to QE: "after more than a year since its initial inception, a review of the program’s impact reveals that policy makers should think twice before further expanding the program-and could benefit from considering more direct ways of increasing spending in the real economy" (p. 237). Here one sees that there are costs to rapidly increasing liquidity-and banks have to bear the brunt of those costs in more ways than one.

Nature of the Study

The nature of the study is rooted in the systematic and empirical investigation of a problem that can be measured quantitatively. The study is not exploratory, as in qualitative research, but rather more direct. It asks specific questions with the intention of measuring the data obtained in a way that promotes validity and reliability within the study as a whole. y surveying the international community members, it is expected that this data can best be obtained.

The sample size will consist of 1000 bankers selected from across the world, all of who are in the international banking sector and from all ranks and levels within the industry. For the purpose of this study, these factors will be considered race, age, gender, ethnicity, nationality, and religion. Therefore, each participants demographic will be requested to assist in providing further input into what variable are impactful in determining confidence levels. This research will have theoretical implications that could be used to raise awareness among the bankers in the international banking community regarding the industry's overall state of preparedness in the face of coming financial and monetary changes.

To ensure generalizability, the study will follow the recommendations of Lincoln and Guba (1985) and Seale (1999). Generalizability can be ensured by carefully describing the methodology used in one 's research and by showing that the research measures what it intended to measure and thus has validity; and that the study 's findings could be duplicated again should another researcher choose to follow the same methodology and use a similar sample, thus showing that the study has reliability (Golfshani, 2003).

Research Questions

This study's research questions will focus on measuring the confidence and knowledge of the bankers in the international banking community. The main goal of these questions is to establish if the international banking community feels confident regarding the prospects of a future recession. The secondary goal is to establish if the confidence levels and knowledge of specific factors about the global economy and or geo-political climate are interrelated.

The research questions for this study are:

Q1) Is the international banking community confident in its ability to handle another global economic crisis like the one experienced from 2007-2008?

Q2) Does geo-political awareness have an impact on the confidence of the members of the international banking community regarding the sectors ability to handle another global economic crisis like the one experienced from 2007-2008?

Q3) Do changes in central bank monetary policy (i.e., going from quantitative easing to quantitative tightening) and the awareness of the rising debt levels around the world affect the confidence levels of the members of the international banking community on the sectors ability to handle another global economic crisis like the one seen from 2007-2008?

Null Hypotheses

For Q1, the null hypothesis is: Bankers in the international banking sector do not have the confidence that they can handle another global economic crisis like the one experienced between 2007-2008.

For Q2, the null hypothesis is: Geo-political awareness causes workers in the sector to doubt the ability of it being able to handle another global economic crisis like the one experienced between 2007-2008.

For Q3, the null hypothesis is: Awareness of how unconventional monetary policy by central banks impacts debt levels causes workers in the industry to doubt that the banking sector is able to handle another global economic similar to the one seen from 2007-2008.

Alternative Hypotheses

For Q1, the alternative hypothesis is: The international banking community is confident that is has the ability to handle another economic crisis similar to the one experienced between 2007-2008.

For Q2, the alternative hypothesis is: Geo-political awareness gives the members of the international banking community confidence that the sector is able to handle another global economic crisis like the one experienced between 2007-2008.

For Q3, the alternative hypothesis is: Awareness of how unconventional monetary policy by central banks impacts debt levels does not cause workers in the industry to doubt that the international banking community sector has the ability to handle another global economic crisis like the one experienced between 2007-2008.

Significance of the Study

This study is vital since it builds on the idea that confidence does play a major role in determining how money is invested, what markets will do, and where money is placed. Confidence does have an impact on everything from precious metals to equities to bonds and even blockchain (Haitsma et al, 2016). It is vital that banks some sense of their confidence levels should another economic crisis hit the industry. Therefore, this study becomes timely since it aims to address this particular concern. Knowing that confidence is low will offer banks an opportunity to de-leverage and reduce their risk for them to better survive an economic crisis. Therefore, this study can contribute tremendously to the field by triggering a self-assessment to determine if measures should be taken aimed at addressing the risk in a timely manner.

The results of this study will advance the guiding framework by indicating whether the banking industry adequately understands the costs and benefits of investments in the age of unconventional monetary policy-an age that has seen debt balloon to truly risky levels (Lupton, 2018) and given Dimon (2017) reason to warn stakeholders about what could be in store in the coming years. The significance of this study can be found in the fact that in the globalized economy, the interconnectedness of the banking industry is a crucial factor in the economic well-being of the nations of the world. By assessing the confidence level of the international banking community members in regards to the banking sectors ability to withstand another global economic crisis like the one experienced from 2007-2008, we can determine if the international banking community did learn from the events of the past or they have all forgotten. The benefits of addressing the research problem are that it can allow stakeholders to better know how to approach markets and it can allow leaders in the industry to understand the industry through the eyes of their own workers.

Definition of Key Terms

Confidence

Confidence is the feeling and knowledge one has in one's own resilience and/or ability to withstand challenges or overcome obstacles without detriment to one's health or well-being. Confidence in the international banking community refers to a sense of preparedness… [END OF PREVIEW] . . . READ MORE

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