Financial regulations and risk in the context of the global recession

Abstract

Purpose-The purpose of this paper is to examine the effects of regulations on the risk during the 2008 financial crisis. In other words, , the causes of the 2008 financial crisis are presented and the main reforms made in the field of international banking after the financial crisis and their effects are offered. Methodology-This study is a comparative situation analysis by using the data of Germany, United Kingdom, United States, EU Area and World. Findings-In order to cope with the effects of the crisis, the United States, Europe and other major economies, which constitute the basis of international financial architecture, have started to take measures rapidly. Priority has been given to eliminating the effects of the crisis on financial markets, and measures have been taken to create a new and strong financial architecture and restore financial stability. This study analyzes these measures and their effects on the economy. Conclusion-After extensive arrangements, the banking sector recorded a significant increase in the amount and quality of capital. This success was mostly achieved with capital increases. The same positive situation is true for liquidity. This is seen not only in the improvement of the main liquidity ratios but also in the reduction of the simple ratio between loans and deposits. The obligation to provide bail for the liabilities of banks reduces the possibility that the banks will be supported by the government through bail in a future crisis.