Globalisation and financial crises Essay Example | Topics and Well Written Essays - 2500 words

Globalisation and financial crises - Essay Example In this regard, recognising that global financial crunch is multifactorial (Bordo, 2008; Wellink, 2009), still, it cannot deny the truism that one of the major factors that led to the global financial crisis is brought by banking failures and difficulties (Blundell-Wignall & Atkinson, 2008; Brown & Davis, 2004). Bank capital is a residual item that is calculated as the difference between assets and those other liabilities, which have more prior claims on banks’ revenues and assets. However, this simplistic definition of bank capital have changed overtime due to regulations and other exogenous factors brought by globalisation, national economies and policies. This continuous evolution on the understanding of bank capital has paved for the concept of bank capital adequacy, which is viewed as having a standing conflict with the notion of bank profitability. In light of this context couple with the gargantuan problem global financial crunch, this research will be looking into the conflict between bank capital adequacy and profitability in relation to the global credit crisis. As such, this research will seek to address the question What is the importance of the conflict between bank capital adequacy and profitability in relation to the global credit crisis? This study is significant because not only it presents current concerns of banking systems across the globe but also it shows the conditions with which banking systems are presently working. Moreover, it endeavours to understand old concepts in the light of the new experience of global financial crisis. Hopefully, this can provide help in the apprehending of the global financial crunch as well as in the charting of policies that may help prevent the same financial crisis from happening in the future. It is the hope of the researcher that the study may add to the existing discourse insights that may clarify the conflict between bank capital adequacy and