THE BRITISH FINANCIAL SECTOR DURING THE GLOBAL FINANCIAL CRISIS OF 2008–2009: DETERMINANTS AND CONSEQUENCES
Abstract
The article examines the impact of the global financial crisis of 2008–2009 on the financial sector of the United Kingdom, which holds a leading position in the global financial architecture. It is noted that the crisis revealed the structural vulnerability of banking institutions to systemic risks and actualized the issue of strengthening regulatory efficiency measures. Four key structural features of the British banking system on the eve of the crisis have been identified: a high degree of integration into global financial markets, excessive expansion of the financial sector, complex architecture of interconnections between financial institutions, and insufficient regulatory supervision. Eight main determinants of the global financial and economic crisis have been distinguished, systematized by groups of macroeconomic, microeconomic, and institutional-regulatory factors. The destructive impact of the crisis on macroeconomic indicators has been analyzed, characterized by recessionary decline in production and deterioration of the labor market situation. Transformations of international financial connections in the post-crisis period have been investigated, particularly the weakening of the influence of the USA and Germany and the strengthening of the role of developing economies worldwide. The avalanche-like nature of the crisis has been established: the collapse of the American mortgage market provoked the collapse of systemically important banks. The role of globalized banks as a channel for transmitting financial shocks to the real economy has been examined, and asymmetry in the behavior of different types of banking institutions during the crisis has been revealed. The key role of the Bank of England in stabilization through the implementation of quantitative easing, reduction of the discount rate, and liquidity support has been determined. The paradoxical resilience of international financial centers, particularly London, despite large-scale crisis shocks has been analyzed. The necessity of a balanced combination of market mechanisms and state regulation to ensure financial stability and comprehensive reform of the regulatory architecture of the financial sector has been substantiated.
References
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Turner J. D. (2014). Banking in Crisis: The Rise and Fall of British Banking Stability, 1800 to the Present. Cambridge : Cambridge University Press, 294. ISBN: 978-1-107-60986-0.
Bank of England. Official website. Available at: https://www.bankofengland.co.uk/
Annesley A., Scheele A. Gender. (2011). Capitalism and Economic Crisis: Impact and Responses Across Europe. Journal of Contemporary European Studies. Vol. 19, No. 3, 335–347. DOI: https://doi.org/10.1080/14782804.2011.610604
Caprio G., D'Apice V., Ferri G., Puopolo G. W. (2014). Macro Financial Determinants of the Great Financial Crisis: Implications for Financial Regulation. SSRN Electronic Journal, 46. DOI: https://doi.org/10.2139/ssrn.1788063
Hodson D., Mabbett D. (2009). UK Economic Policy and the Global Financial Crisis: Paradigm Lost? JCMS: Journal of Common Market Studies. Vol. 47, No. 5, 1041–1061. DOI: https://doi.org/10.1111/j.1468-5965.2009.02034.x.
Office for National Statistics. (2024). Measuring progress, well-being and beyond GDP : official statistics portal. Newport, UK : ONS. Available at: https://www.ons.gov.uk/peoplepopulationandcommunity/wellbeing
Office for National Statistics (2015). National Well-being Measures, September 2015. Newport, UK : ONS, 5.
Choudhry T., Jayasekera R., Kling G. (2014). The Global Financial Crisis and the European Single Market: The end of integration? Journal of International Money & Finance. Vol. 49, 191–196. DOI: 10.1016/j.jimonfin.2014.08.002
Georgoutsos D. A., Migiakis P. M. (2013). European sovereign bond spreads: financial integration and market conditions. Applied Financial Economics. Vol. 23, No. 20, 1609–1621. DOI: 10.1080/09603107.2013.842637
Nasir M. A., Du M. (2017). Integration of Financial Markets in Post Global Financial Crises and Implications for British Financial Sector: Analysis Based on A Panel VAR Model. Journal of Quantitative Economics. Vol. 15, No. 3, 493–524. DOI: https://doi.org/10.1007/s40953-017-0087-2
Hõbe L. (2015). The Changing Landscape of the Financial Services. International Journal of Trade, Economics and Finance. Vol. 6, No. 2, 145–150. DOI: https://doi.org/10.7763/IJTEF.2015.V6.459
Akinsoyinu C. (2015). The Great Financial Crisis: How Effective is Macroeconomic Policy Response in the United Kingdom? International Journal of Finance & Banking Studies, Vol. 4, No. 2, 10. DOI: https://doi.org/10.20525/ijfbs.v4i2.207
Aiyar S. (2012). From Financial Crisis to Great Recession: The Role of Globalized Banks. American Economic Review. Vol. 102, No. 3, 225–230. DOI: https://doi.org/10.1257/aer.102.3.225
Claessens S., van Horen N. (2015). The Impact of the Global Financial Crisis on Banking Globalization. IMF Economic Review. Vol. 63, 868–918. DOI: https://doi.org/10.1057/imfer.2015.38
Dimsdale N. (2009). The Financial Crisis of 2007–9 and the British Experience. Oxonomics. Vol. 4, No. 1, 1–9. DOI: https://doi.org/10.1111/j.1752-5209.2009.00026.x
Slattery D., Nellis J. G. (2011). Rethinking the Role of Regulation in the Aftermath of the Global Financial Crisis: The Case of the UK. Panoeconomicus. Vol. 58, No. 3, 407–424. DOI: https://doi.org/10.2298/PAN1103407S
Baber G. (2014). Legislative and regulatory responses to the global financial crisis from within the United Kingdom. Journal of Financial Crime. Vol. 21, No. 2, 124–148. DOI: https://doi.org/10.1108/JFC-09-2013-0053
Green C. J., Pentecost E. J., Weyman-Jones T. (Eds.). (2011). The Financial Crisis and the Regulation of Finance. Cheltenham, UK ; Northampton, MA : Edward Elgar Publishing, 296. DOI: https://doi.org/10.4337/9781849808712
Cassis Y., Wójcik D. (Eds.). (2018). International Financial Centres after the Global Financial Crisis and Brexit. Oxford : Oxford University Press, 352. DOI: https://doi.org/10.1093/oso/9780198817314.001.0001
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