Annals of the University of Oradea: Economic Science (Jul 2012)
THE IMPACT OF THE FINANCIAL CRISIS ON THE EUROPEAN BANKS
Abstract
The fast innovations existent on financial markets and the internationalization of cash-flows in the last decade led to changes within the banking industry making it unrecognized. The financial innovation within the banking industry, especially the one regarding the off-balance-sheet instruments has effects as the risk focus and the increase of volatility within the entire banking industry. As it is proved by the economic crisis, the financial stability plays an important role within the financial system as well as within the economy as a whole. At the moment, as the number of active financial institutions is getting higher and higher in one or more countries or on one or more continents, the financial stability at a worldwide level became even more important. The objective of this work is to emphasize the way in which the European banks were affected once with the global financial crisis. The economic crisis was triggered by the bankruptcy of the Lehman Brothers ‘ Investment Bank, in the autumn of 2008 and its effects were felt at the level of the European financial markets, a series of cross-border groups claiming interventions of the state in order for them to be saved. The intensity of the crisis was felt and it affected many states, the impact of these ones being influenced by a series of specific factors which outlined the situation of their financial system, at the moment of the crisis release. At the level of the European Union, a series of measures have been established in order to extinguish the identified dysfunctions at a financial field level, among which we mention: the improvement of the surveillance framework of those financial institutions having cross-border activity, the expansion of the communication and cooperation among the EU surveillance authorities and the ones outside the Union, etc. The conclusions of the study of this paper work in regards to the activity of the main European banks, especially to the ones from Western Europe, is the fact that during the crisis period, they intensified their cross-border activities and increased their incomes. The increase of incomes was generated by both the fast efficient measures taken by the state and the volatility of the emergent markets. All these aspects were detailed in the content of this paper work. As far as this work is concerned, the method used here consist in a deductive-type research, which means that the starting point is represented by general facts in order to get to particular ones, starting from a theory that has as purpose the application of that certain prediction, assuring a wider knowledge area and being more operational. The selection of the pieces of information was done through different methods, as are the quantitative and the qualitative research types. The pieces of information presented here were picked up from different sources, as published articles and specialized books, all being from the financial field.
