Global Financial Crisis Essay Sample 2020

This essay will evaluate the origin of bankruptcy of world’s 3rd largest investment bank as Babcock and Brown Ltd that situated in the Australia.

This essay will discuss various financial causes of global financial crisis in 2008 that effected Australian manufacturing companies including the fluctuation in Australian currency as dollar.

In addition, this business essay will also analyse the impact of global financial crisis on automotive industry across of the globe. In which way GFC influenced the job opportunity to reduce the employment in different countries will also be examined in this essay.

Moreover, this essay will justify the implication and influence of global financial crisis on the economic stability of Pakistan by analysing banking sectors, textile industry, poverty and unemployment (Taylor and Clarida, 2014).

Babcock and Brown Ltd was Australia’s second and world’s third investment bank that collapsed due to global financial crisis in 2008.

James Babcock and George Brown established this company at San Francisco in the year 1977 (Berlatsky, 2012).

In 2008, the market share of Babcock fell around 27% and the market capitalisation fell under $2.5 billion. There are many reasons are influencing the failure of Babcock and Brown Ltd such as satellite funds, company’s financial arrangements, fallen of share price and repay debts.

Apart from that, Australian Stock Exchange received a price query from the house of trading halt. The shareholders of Babcock and Brown Ltd also got less profit due to the global financial crisis and the management was unable to offer sufficient amount of profit to its genuine shareholders.

Phil Green as a CEO of Babcock and Brown Ltd analysed sharp 30% drop in profit due to the global financial crisis(Javid, 2013). As a result, the share price was collapsed further 36% towards at $2.22 that includes high debts and liabilities in assets management(Monacelli and Quadrini, 2013).

Moreover, European institutions dominated the organizational structure of Babcock and Brown Ltd including legal agreements by estimating total liabilities as $800 million. A huge financial loss lead Babcock and Brown Ltd towards voluntary administration by a debt restricting plan.

Comparing with Pakistan’s Banking sector that mainly covers State bank of Pakistan suffered by global financial crisis influenced by Babcock and Brown Ltd collapse that is Australia’s 3^rd popular investment bank.

The authority of banking sectors of Pakistan is highly effected by the financial crisis across the globe. The conflicts in exchange rate was also effected by the Australian economic crisis.

Due to the high conflicts in currency value, the foreign direct investors did not support the liabilities and debts of state bank of Pakistan. Moreover, the opening balance and loan accounts of several citizens were also affected by worldwide financial crisis.

The interest rate was reduced for loan accounts and most of account holders became defaulter due to conflicts in exchange rates in Pakistan (Flassbeck, 2011). The bankruptcy of Babcock and Brown Ltd that was a famous Australian investment bank also effected the operational process of State Bank of Pakistan.

In other words, due to GFC, FDI of Australia had received a huge loan amount request from the SBI of Pakistan for availing interests to account holders(Rafaqet Ali and Muhammad Afzal, 2012).

Australian dollar commencing in the year 2008influence the economic stability of differentmanufacturing companies of the Australia. In other words, global financial crisis impacted the product manufacture process of Australian companies that damaged the Australian economy.

The taxation amount was increased at 8.5% compared up to 12.1% in 2000 that critically explained the contribution of the Australian manufacturing companies.

Due to global financial crisis, the supply chain management of many Australian manufacturing companies was effected and the production cost was rapidly increased(Rollings, 2017).

Moreover, due to high production cost, the maximum retailing price of the Australian products included large price tag. The general customers not supported this high pricing marketing strategy of those Australian manufactures that lead to organizational bankruptcy.

Along with this part, the global recession was delayed due to the impact of global financial crisis on Australian manufacturing that also influenced high value of the Australian dollar commencing in 2008.

In addition, the Australian dollar commencing led to long-term basis deterioration to influence the competiveness of the manufacturing of the Australia. Apart from that, the deterioration of Australian manufacturing is critically measured by the high value of the Australian dollar commencing.

The shareholders of different Australian manufacturing got huge financial losses due to the global financial crisis in 2008.Comparing with Pakistan that also being effected by economic disaster and various external sectors were impacted by the national economy of the Pakistan due to global financial crisis.

According to the financial report of Karachi stock exchange (2008-2012), the sub-prime mortgage market had economically suffered in the year 2017. Different organizational sectors like banking sectors and textile sectors were affected by the global financial crisis.

The rate of job deployment in Pakistan was also influenced by the worldwide economic conflicts (Egendorf, 2014). On the other hand, the financial sectors like state bank of Pakistan wasalso impacted by international economic conflicts and the global financial crisis also impacted on textile industry of Pakistan.

The business extension process of different automotive companies had faced various sustainability issues due to global financial crisis.

In other words, the automotive industry was economicallyeffected by the global financial crisis including consisting of linked sets, specialised clusters and global integration.

In order to facilitate collaborations, the automotive industry introduced leverage engineering efforts in diverse multiple markets(Wim, 2009). On the other hand, the production side of automotive industry covered dominant trends that has been introduced sine min-1980s including both technical and political causes.

On the other hand, the assembling process of technical equipment was also effected by global economic disaster(Sternberg, 2013). The aftereffect of global economic crisis also influence the job opportunity in different regions. Highest rate of the job losses in different industries including automotive sector was critically affected by the global financial crisis.

The owners of automotive industry had faced fallen local demands for vehicles in Australia due to global financial crisis. In other words, the government of Australia also introduced a business tax break to stimulate and measure the automotive local market.

Apart from that, the highest job losses in regional areas are also being effected by the worldwide economic crisis and the management of manufacturing companies did not provide dedicated salary packages to the employees. As a result, most of the employees had to lose their jobs due to global financial crisis in 2008.

In regard to this, the level of employment deteriorated, poverty increased thereby destroying the economic stability of the nation(Norcliffe, 2011).Comparing with the government of Pakistan that also introduced the Cotton Export Corporation of Pakistan (CEC).

In order to trade into the international context, CEC created barriers for local cotton manufactures. Apart from that, cotton is the only segment of the textile industry of Pakistan that had financially suffered from global economic crisis. Besides that, cotton spinning is another critical part of the Pakistan’s textile industry.

The rate of both poverty and unemployment in Pakistan had been measured and effected by global financial crisis. Most of the people lost their jobs due to the conflicts in exchange rate and currency value in Pakistan.

Thus, women poverty is also influenced by global financial crisis that lead to unemployment segment (Sternberg, 2013). Local companies did not offer annual package based salary to the citizen of the Pakistan due to high exchange value and high production cost.

The government of Pakistan additionally arranged job opportunity for some highly educated citizen of the Pakistan. Conclusively, both poverty and unemployment in Pakistan reduced the national economy due to GFC(Joye and Blayney, 2014).

References

Berlatsky, N. (2012). The global financial crisis. Detroit, Mich.: Greenhaven Press.

Egendorf, L. (2014). Pakistan. Detroit: Greenhaven Press.

Flassbeck, H. (2011). The exchange rate: economic policy tool or market price?. Geneva: UNCTAD.

Joye, M. and Blayney, P. (2014). Cost and management accounting practices in Australian manufacturing companies. [Sydney]: University of Sydney, Accounting and Finance Foundation.

Monacelli, T. and Quadrini, V. (2013). Financial markets and unemployment. Cambridge, MA: National Bureau of Economic Research.

Norcliffe, M. (2011). The automotive industry in emerging markets. London: GMB.

Rollings, N. (2017). Babcock and Wilcox Ltd, the ‘Babcock Family’ and regulation 17/62: A business response to new competition policy in the early 1960s. Business History, pp.1-20.

Sternberg, E. (2013). Ethical Misconduct and the Global Financial Crisis. Economic Affairs, 33(1), pp.18-33.

Sternberg, E. (2013). Ethical Misconduct and the Global Financial Crisis. Economic Affairs, 33(1), pp.18-33.

Taylor, M. and Clarida, R. (2014). The Global Financial Crisis. Hoboken: Taylor and Francis.

Javid, D. (2013). Market Efficiency for the Pakistan Stock Market. South Asia Economic Journal, 7(1), pp.67-81.

Ali. R. and Afzal, M. (2012). Impact of global financial crisis on stock markets: Evidence from Pakistan and India. Journal of Business Management and Economics 3(7). pp. 275-282.

Wim, N.(2009). The financial crisis of 2008 and the developing countries.WIDER Discussion Papers, World Institute for Development Economics (UNU-WIDER), 12(1),pp.2-23.