Global Business Environment - the Banking Sector of Pakistan vs Essay

Global Business Environment - the Banking Sector of Pakistan vs. Uk&Greece - Essay Example 1.2 The Crisis Chain The global financial crisis brought about a tremendous and dramatic turn around in the banking sector across the world and there were hardly any economies that remained unaffected by the same. Not just the banking sector, but the sub-prime mortgage crisis brought about a chain of crisis causing a high velocity downfall in real estate, stock exchanges, and insurance companies as well – many big names fell apart, bail out packages were developed in order to reduce the impact, inflation went sky rocketing, and at the end of the chain, consumers lost loads and loads of money. Krugman (2009) states that a situation came where economists describe that there were empty houses in the US, and homeless people outside the same – showing the reduced purchasing power, and high prices of land and mortgage. Economists call the year 2008 as the ‘Global Financial Earthquake’. This era was known as the most depressive economic scenario since after the Gr eat Depression of the early 30s. This assignment aims at discussing and comparing how the environmental and macroeconomic variables in countries like UK, Greece, and Pakistan have affected the banking sector in these respective regions. ... It shows the linkage of financial markets with government, the employment (or unemployment), organizations and corporate, households, and the commodities markets. There is strong co-relation between these entities and any jolt, can lead to a drastic effect on all the others. 2. Analysis of Banking Sector in UK 2.1 PLEST Analysis Paulson (2011) states that the global financial earthquake of 2008 ripped apart the exceptionally high growth of the previous years, closing the huge names of the financial sector close to bankruptcy. In terms of the banking sector in the UK, the banks are rather politically and legally secured – as UK is recognized as the pioneer of financial system globally. The banking sector is also technologically fairly sound. The 2008 decline was primarily witnessed due to the drastic changes in the economic and social habits and norms of the population. Primarily a sub-set of the sub-prime mortgage crisis that initiated the panic, UK’s economy took a dow nturn. The primary cause of this being the over -spending habits that had embedded in the norms of the society, which was in turn, was caused by the easy presence and availability of the credit cards. Lewis (2011) states that most of the consumers had over spent their budgets in expectation of their future cash flows, which did not happen as bankruptcy became a common feature, employees were laid off in one go, salary, were reduced, and big names like JP Morgan, Lehman Brothers, etc. went off the hook. Government ultimately intervened with bail out packages to assist in the survival of the financial backbone of the economy. 2.2 Macroeconomic Indicators There are three primary macroeconomic