Assessing the Impact of Credit Risk Management by Investment Banks on Investors after Crisis

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Abstract

In this paper, we will try to assess the impact of credit risk management by investment banks on investors after crisis. Furthermore, the paper also discusses how investors are affected during financial crisis due to changes in regulatory factors, especially with respect to credit risk management techniques by investment banks. The paper seeks to derive results based on secondary research which present an overview on how investment banks can assist investors after crisis. The paper is significant for the purpose of determining the negative impact on the investors due to credit risk management techniques such as rise in interest rates. Table of Contents

Abstracti

Introduction1

Impact on Investors2

Decline in Investor's confidence3

Methodology5

Research Design5

Literature Search5

Confidentiality6

Ethical consideration7

Results8

Conclusion9

References11

Impact of Credit Risk Management Techniques by Investment Banks on Investors Post Crisis in Uk

Introduction

Credit risk management techniques have become essential for investments banks post crisis in UK. There has been a significant impact on investors as well in terms of amount of loan borrowed, and investments made after crisis. However, it needs to be ascertained whether the impact has been positive or negative. Investors need to give complete documentation pertaining to their profile to investment banks as investment banks now need comprehensive data on customers. This data must be absolutely clear and understandable.

Investment banks now need to assess the risks associated with the core banking products which was granted as a loan, and to manage them. These have resulted in modification in policies such as interest rates. High interest rates have resulted in pushing the investors away from investments as compared to previous scenarios when rates were low. On the other hand, term structure of credit products (for how long the loans were granted) works closely with the management of liquidity risk. These factors are also involved in having an impact on investors as investors now face tight regulation policies.

Research Question

How have credit risk management techniques by the investment banks affected the investors after crisis in UK?

The research question will aim to answer the implications which the investors have to face post financial crisis in the United Kingdom due to changes in the credit risk management policies and techniques by the investment banks.

Literature Review

In this section, we will talk about the impact of credit risk management by investment banks on investors after crisis.

Impact on Investors

Investors' needs have become increasingly complex in an environemtn of heightened risks such as economic, and regulatory risks. Therefore, investment banks have to learn to adapt to meet the concerns of the investors. To take a couple of examples, in the area of investment banking, banks have looked to integrate the work of macro teams more closely with that of credit research over the past year to help bondholders assess corporate risk on Europe's periphery (Summer 2003, pp. 124).

Furthermore, in the index space, bespoke advice has been key as investors look beyond traditional benchmarking, not least because indexes have proven move risky to follow than was previously assumed (Repullo & Suarez 2004, ...