Banks

The collapse of Bear Stearns and Lehman Brothers in 2008 has triggered debates on the role of executive compensations in inducing risk-taking behavior. The implication is far-reaching given that executive pay reforms have been proposed to prevent another financial crisis.

Just 24% of adults living in sub-Saharan Africa have a bank account with a formal financial institution. Only the Middle East/North African region has a lower participation rate, according to World Bank data. Over the past decade, however, microfinance in the region has gained momentum, with improvements in the regulatory environment, an increase in the operational efficiency of microfinance providers and continued donor interest in supporting the sector.

The ongoing financial crisis brought to the forefront gaps in clear, objective assessments of systemic risk relating to the U.S. banking sector. Many observers believe that there are unresolved questions in this area, and that the so-called “too big to fail” problem for large banks persists. But how to measure fragility and risk accurately remains an open question.

Between 1994 and 2006, subprime lending grew from $35 billion to $600 billion a year in the United States, amounting to 23% of all mortgage dollars lent. The ensuing subprime mortgage market crash led to severe disruptions in the global financial markets.  By the third quarter of 2007, about 25% of subprime loans were either delinquent or in foreclosure.

While companies’ charitable activities often get favorable publicity, studies on the relationship between corporate social responsibility and financial performance haven’t allowed broad conclusions to be drawn.

On September 19 BP’s Deepwater Horizon well was officially declared sealed after having poured nearly 5 million barrels of oil into the Gulf of Mexico. Coincidentally, the following day the National Bureau of Economic Research announced that the recession that started in late 2007 had ended in June.  While these two crises are now ostensibly over, their effects are likely to be felt for years.