Banking crisis. Case of U.S. banks versus UK banks

Abstract

A variety of factors led or contributed to the current financial crisis, including loose monetary policy; excessive financial market liquidity, leverage and maturity mismatch; weak risk management and underwriting standards; and poor incentives and regulatory gaps in some important segments of the financial system. These weaknesses were amplified by certain pro-cyclical dynamics in regulatory, accounting and risk management frameworks. The banking sector was at the centre of the crisis as the market stress led to an acute re-concentration of on- and off-balance sheet risks in banks, putting pressure on capital buffers, liquidity and credit availability. The weaknesses in the banking sector amplified the transmission of shocks from the financial sector to the real economy. In this paper we want to study the impact of financial crisis on a sample of banks (five banks from USA - JPMorgan Chase & Co, Citigroup, Wells Fargo & Company, US Bancorp, Bank of America Corporation - and five from UK - HSBC Holdings, Royal Bank of Scotland, Barclays, Standard Chartered, Lloyds Banking).banking crisis, interest rate of monetary policy, loan loss provision