How banks work Coursework Example | Topics and Well Written Essays - 250 words

How banks work - Coursework ExampleA banks operations are optimal when it has sufficient reserves to contain any shocks in the business. The government and credit agencies should excessively enforce banking regulation since the failure is partly attributed to laxity in regulation.Banks generate receiptss through lending. The financial crisis of 2009 stirred most financial institutions. Most mortgages given by the financial institution prior to that period did non consider the borrowers ability to pay and and so default was imminent. The result was heavy loss and thus reduction of bank reserves and deposits. As such, the banks were wary of lending more funds to individuals and businesses. The result was that banks revenue declined as well as the growth of businesses. The risks involved in lending at the time was the principal(prenominal) reason for the slow recovery. An example to illustrate this is that the Bank of America reduced its mortgages portfolio and invested more in i nvestiture loans. In the period 2010-2012, mortgages reduced from $450 billion to $310 billion (Forbes, 2015)Forbes. (2015, March 11). U.S. Banks Witness Highest Post-Recession Growth in Loans everywhere 2014 - Forbes. Retrieved from http//www.forbes.com/sites/greatspeculations/2015/03/11/u-s-banks-witness-highest-post-recession-growth-in-loans-over-2014/The Economist. (2013, September 7). The origins of the financial crisis Crash course. RetrievedApril29, 2015, from