[Service Performance of Mortgage Facilities in the UK Retail Banking Industry: A Case Study of Lloyds TSB Bank, Taunton Branch, Somerset, UK]

by

AckNowledgement

I would take this opportunity to thank my research supervisor, family and friends for their support and guidance without which this research would not have been possible.

DECLARATION

I, [type your full first names and surname here], declare that the contents of this dissertation/thesis represent my own unaided work, and that the dissertation/thesis has not previously been submitted for academic exaMination towards any qualification. Furthermore, it represents my own opinions and not necessarily those of the University (Adam, 2004,, 1).

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Abstract

The academic literature has regularly argued that market discipline can support regulatory authority mechanisms in ensuring banking sector stability. This includes, amongst Other things, using forward-looking market prices to identify those credit institutions that are most at risk of failure. The paper's key aim is to analyse whether market investors signalled potential problems at Lloyds Bank in advance of the bank announcing that it had negotiated emergency lending facilities at the Bank of England. A further aim of the paper is to exaMine the signalling qualities of four financial market instruments (credit default swap spreads, subordinated debt spreads, implied volatility from options prices and equity measures of bank risk) so as to explore both the relative and individual qualities of each. The paper's findings, therefore, contribute to the market discipline literature on using market data to identify bank risk-taking and enhancing supervisory monitoring. Our analysis suggests that private market participants did signal impending financial problems at Lloyds Bank. These findings lend some empirical support to proposals for the supervisory authorities to use market information more extensively to improve the identification of troubled banks. The paper identifies equities as providing the timeliest and clearest signals of bank condition, whilst structural factors appear to hamper the signalling qualities of subordinated debt spreads and credit default swap spreads. The paper also introduces idiosyncratic implied volatility as a potentially useful early warning metric for supervisory authorities to observe.

Table of Contents

ABSTRACT4

CHAPTER 01: INTRODUCTION7

1.1. Introduction7

1.2. Background of the Study7

1.3. Statement of Problem8

1.4. Aims, Objectives & Research Questions8

1.5. Significance of the Study8

1.6. Justification9

1.7. Scope of the Study9

1.8. Limitations of the Study9

CHAPTER 02: LITERATURE REVIEW10

2.1. Introduction10

2.2. Mortgage Provision in the UK Retail Banking Industry11

2.3. Service Performance of Recent Mortgage Facilities13

2.4 Responsible Borrowing15

2.4.1The retreat from disclosure and the rational consumer15

2.4.2 The advance of behavioural economics and paternalism16

2.4.3 Mortgage credit and the aspiration of home ownership16

2.5 Responsible Lending18

2.5.1 Product regulation19

2.5.2 Affordability checks20

2.5.3 Information, explanation and advice22

CHAPTER 03: METHODOLOGY23

3.1. Methodology23

3.2. Research Methods24

3.2.1 Quantitative Research Method24

3.2.2 Qualitative Research Method24

3.3.1 Data Analysis Strategy25

3.4 Research Design26

3.5 Target Population26

3.6 Sampling Size and Procedure26

3.7 Source of Data Collection26

3.8 Research Instruments27

3.9 Instrument Administration27

3.10 Data Analysis27

Analysis & Findings28

Key Lessons Learned34

Overall Results of Using a Customer-Tracking System36

What Technology Is Next for the Bank?37

Summary38

CHAPTER 05: CONCLUSIONS & RECOMMENDATIONS39

5.1. Conclusion39

5.2. Research Issues Justification39

5.3. Recommendations39

CHAPTER 06: REFERENCES42

6.1. References form book42

6.2. References from web42

6.3. References from article and journals42

6.4. Appendix44

6.4.1. Survey Questionnaire44

6.4.2. Financial Data46

Chapter 01: Introduction

1.1. Introduction

The academic literature has regularly argued that ...