Illustration of a recent financial crisis, Corporate Finance

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Question:

"The history of banking is so deeply littered with disasters that it could not be too hard to establish the causes... Fear, greed, loss of corporate memory, weak management- all these have featured in the list of drivers and failings." (Braking the banks, article by David Lascelles, in the Financial World magazine of March 2008).

(a) Taking a illustration of a recent financial crisis that has shaken the world; describe how banks can put a halt to economic development of a country.

(b) Credit risk shows the major risk of any commercial bank. Do you think that the financial crisis is only caused by banks mismanagement of credit risk?


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