Assessing the Effectiveness of the Financial Strategies Adopted By Investment Banks against the Financial Crises

By

ACKNOWLEDGEMENT

I would like to thank my supervisor for supporting me throughout my project and giving his valuable suggestions. Finally thanks to all my friends and family for their utmost support and inspiration.

DECLARATION

I (name of the student) hereby declare that the contents of this dissertation stand for the individual work of mine and does not include any aid and also that this study has neither been presented earlier for any academic examination nor at any professional level. The study is based on own ideas and does not involve only the ideas presented by the professors at university.

Signed __________________ Date _________________

ABSTRACT

The research study highlights the effectiveness of the financial strategy within the investment banks. The financial strategy is considered to be an important factor in protecting the firm against financial crises. The investment banks that are involved in providing number of financial services are greatly affected by the financial crises. The current financial crisis has badly hit the investment banks and leads them to adopt new financial strategies. The United States economy faced low interest rates and rising prices for houses let many people to think that it would be easier for them to buy the houses at low cost. During this period, the investors also demanded for the higher yield and structured securities when the liquidity surpluses were high. Similarly, this trend was further encouraged by the low returns and the financial market expanded by 800% during the years 2000 to 2005. The complex system of the securitization structures put the financial institutions in the risk. Barclays is a group that is involved in providing financial services. The Barclays secure fourth position in the United Kingdom. It presently provides work for around 78,000 employees and holds most of the stocks in the banking industry. The main focus of the Barclays is on the retention of the customers, shareholders and the stakeholders with a goal to provide a prosperous boundary to the contented stakeholders. The Goldman Sachs was developed in the year 1869 that is headquartered in the New York City having other offices in the major financial centers of the whole world. The company also provides the financial services of the underwriting, advice on acquisitions and mergers, services of asset management. The company is also a primarily dealing in the security market of the United States Treasury. Recently, there has been developed the financial system of the company that can cope with the financial distress.

TABLE OF CONTENTS

ACKNOWLEDGEMENTII

DECLARATIONIII

ABSTRACTIV

CHAPTER 1: INTRODUCTION1

Background of the research study1

Problem Statement4

Aims and objectives of the research study4

Significance of the research study5

Rationale of the research study5

Research Question(s)7

CHAPTER 2: LITERATURE REVIEW8

Theoretical Framework8

Financial Crises9

Reforms for the Financial Crisis15

Consequences of Financial Crisis16

Techniques for Preventing Financial Crises18

Refocusing On Economic Fundamentals18

Stay Focused On Strategy19

Do not overreact19

Financial Strategy20

Steps for Implementing Financial Strategy21

Need for Effective Financial Strategy22

Financial Policy22

Investment Banks24

Barclays Capital24

Quality of service in Barclays25

Experience26

Innovation27

PEST Analysis28

Political Analysis28

Economic Analysis28

Social Analysis29

Technological Analysis29

Goldman Sachs29

Goldman Sachs and Financial Crises30

CHAPTER 3: METHODOLOGY32

Introduction32

Research Methodology33

Research design33

Research Approach34

The Research Process35

Quantitative ...