[The Global financial crisis 2007 to 2009 & its effects on cost of capital-An Empirical study of Debt and Equity Capital in the UK]

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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

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ABSTRACT

In this study we try to explore the concept of global financial crisis 2007 to 2009 in a holistic context. The main focus of the research is on global financial crisis and its relation with debt & equity. The research also analyzes many aspects of global financial crisis 2007 to 2009 and tries to gauge its effect on the cost of capital in UK. Finally the research describes various factors which are responsible for global financial crisis 2007 to 2009 and tries to describe the overall effect of global financial crisis on debt and equity capital in the UK.

TABLE OF CONTENTS

ACKNOWLEDGEMENTII

DECLARATIONIII

ABSTRACTIV

CHAPTER 1: INTRODUCTION1

Background of the study1

Problem Statement4

Purpose of the study12

Rationale of the study13

Significance of the study14

CHAPTER 2: LITERATURE REVIEW18

CHAPTER 3: METHODOLOGY36

CHAPTER 4: ANALYSIS & RESULTS62

CHAPTER 5: DISCUSSION & CONCLUSION76

REFERENCES88

CHAPTER 1: INTRODUCTION

Background of the study

The Global Financial crisis of 2007 -2009 provides great recession and leads a company to the stage of crisis in case of blocking the provision of capital to business long enough to generate failures. Thus one of the most important parts of post-crisis financial management is to define the impact of the crisis on the cost of capital, determinate factors that have influence on the cost of capital and how they have changed due to the financial crisis and by the means of that knowledge make the optimal financial decision to develop a company. According to the global financial crisis of 2007-2009 a lot of changes have happened in all spheres of economy. The impact of basic factors on the cost of capital was changed because the conditions of the environment were changed. That in turn has an effect on the behavior of investors. The loan capital became the cheapest source of capital and the equity capital is too expensive for the enterprises nowadays, at the same time the availability of different sources of capital changed. So the firm should act in different way and create new financial strategy and as a result the strategy of development. Thus in the adjustment process we have to find new way to optimize the structure of capital with less expenses, new methods of decreasing the cost of capital and new sources of capital. The analysis of the influence of financial crisis on the cost of capital will help UK companies to go out of crisis and move to another stage of growth. There are several external and internal factors, which ...