Abstract:
|
In 2008, the United States and indeed the world, experienced the worst financial crisis since the Great Depression (1930). The 2008 financial crisis demonstrated the importance of the financial industry and, in particular, the prominence of banks in the economy. When the stock prices of strongly consolidated entities in the United States such as Merrill Lynch, Citigroup or Lehman Brothers sank, the fragility of the financial system became evident. As a result, the confidence of shareholders and customers in banks as a safe place to deposit their savings disappeared. The structural failures of the financial institutions during the global financial crisis have made us more aware of the high dependence of the entire economy (consumption, spending, investment, employment) on the health of financial institutions. Without bank loans, advisory from banks and investment firms, or insurance coverage, the real economy would sink.This research Paper aims to provide a springboard for understanding the roleof banks in the economy and analysing the different valuation methodologies used for banks. There are many challenges in analysing a bank, due to its cyclicality, forms of reporting and regulations to which they are exposed |