How the Total Assets of Financial Institutions changed after the Global Financial Crisis

The global financial crisis occurred between 2007 and 2008. It is sometimes referred to as the great Depression which paralysed many financial institutions both locally in several countries and globally. It affected the U.S. stock market, the international banks, and the local economies of many countries.

Among the most severely affected were the financial institutions especially the banks. Their total assets declined in value and most of these institutions were bailed out. In the United Kingdom, the BNP Paribas, a huge institution underwent a total evaporation of its assets. Large investors and savers threatened and even went ahead to liquidate their assets that they had deposited in the financial institutions. Other institutions got in to bad losses through huge loans and toxic assets. For instance the International Monetary Fund statistics indicated that some major banks in Europe and the United States lost close to one trillion dollars through these ((McKibbin, 2009, p. 20-22).

Another victim of the global financial crisis was the British bank, known as the Northern Rock which had to get security of its assets from the bank of England, which scared off the investors causing them to withdraw, thus the total assets declined to a great extent. Later on after the bank was unable to sustain its assets as a private entity, it was left to the public. Those institutions that specialized in mortgage lending faced more challenges during the crisis with many becoming bankrupt as a result (McKibbin, 2009, p. 23-26). A good example is the Bear Streams bank which was at the verge of collapsing in March 2008, and ended up being bought by the JP Morgan Chase.

Basically, most financial institutions lost their total assets; others liquidated them while in others there was a total collapse.

List of references

McKibbin, W. J. 2009. The Global Financial Crisis: Causes and Consequences. Los Angeles: University of Southern California Press.

[PS1]Possible sources: http://print2.dailymirror.lk/business/127-local/42823.html http://news.kontentkonsult.com/2008/09/dubai-multi-commodities-centre.html