MASTERS RESEARCH: DEFAULT RATES IN THE FINANCIAL INSTITUTIONS

Masters Research: Default Rates In The Financial Institutions

Masters Research: Default Rates In The Financial Institutions

Background of the Problem

Since the onset of the financial crisis in East Asia in 1997, UK has caught the attention of the not only for its critical foreign exchange policy but also for the uncertainties surrounding its own future. UK has so far averted a currency crisis and maintained relatively sound economic performance. The frequently discussed contributing factors include inconvertible UK currency under the capital account, current account surpluses in most of the 1990s, the dominance of foreign direct investment and long term debt in total capital inflows, and world's second largest foreign exchange reserves. The UK economy, however, is not totally immune from the crisis. Growth of both exports and foreign direct investment slowed significantly in 1998(Chen 2000). Doubts have been cast on the effectiveness of the government's control over capital movement (Institute of Economics 1998). Already, about half of UK's currency, which is equivalent to one-fifth of UK's circulated currency, is used in southern UK. Similarly, in UK, more than 10 billion yuan UK currency is in circulation. It is argued that parallel use of foreign currency in a country, without tax, could produce similar outcomes as free flow of capital (Dorfman Yvonne 2000 pp.119-121). Economists are often puzzled by the coexistence of excess domestic saving and massive capital inflows in UK. In the 1990s, only the United States takes in more capital than UK. Domestic saving was, on average, 5 percent greater than domestic investment. The 'missing money' was partly wasted in the domestic financial system and partly moved out of the country through informal channels. By examining carefully the accounts for international transactions, Li Yang (1998) estimated UK's total informal outflow of capital at $US87.5 billion in the period 1992-96, which was about 43 percent of the capital inflow during the same period.

Aims and Objectives of the Study

Following are the aims and objectives of this study:

Analyze the Challenges of the UK banking sector.

Understand the recent reforms in the UK banking sector focusing on the Lloyds Bank of UK.

Recommend policy reforms to tackle the issues and challenges in the Lloyds Bank of UK.

Research questions

What is the need of motivation? Why is it needed in banking sector?

How effective is the traditional theories of motivation?

Effective strategy of the Lloyds bank to motivate their employee.

The status of the Lloyds bank in this recession market and how they differ in their service and staff motivation to their rivals.

Problem Statement

Banking sector reform is best approached by considering the "stock" problem and the "flow" problem, where the stock problem refers to the stock of bad loans, and the flow problem refers to the fact that current lending decisions are still not made on a commercially sound basis (Green 2005 pp.90-109). UK's financial system, especially its banking sector, suffers from serious vulnerabilities. First, the nonperforming loans have increased to alarming levels. In 1997, the proportion of nonperforming loans was 24 percent for the four state-owned commercial banks, including 6 percent bad debts and 18 percent overdue loans. It was more serious than that in pre-crisis Thailand (15 percent), ...