FIN 800 Lecture Notes - Lecture 39: Libor Scandal, Basel Ii, Dot-Com Bubble
Document Summary
Greater concern for return of capital than return on capital (reduces capital for investment) Compliance and risk management are fastest growing departments at all diversified global banks. Harder to build trust with clients and to be believed. Capitalism investment decisions driven by corporations and private entities. Role of financial professional is to help allocate capital appropriately. Providing information to help investors make that decision (auditors, analysts, cfos) Actually providing capital directly (bankers, cfos, government) Advising clients on capital allocation (advisors, insurance, planners, bankers) Effects if capital is allocated well and poorly. Due to many financial market crisis resulted in more regulation, more compliance, loss in trust, and incentive system. E. g. different growth rates, unemployment levels, company performance, countries. Downfall of enron, worldcom, tyco, nortel accounting principles. Financial crisis of 2008 leverage where banks absorbed 2. 5% Libor scandal reference rate for short term loan which was manipulated by banks. Concerned with generation, allocation and management of monetary resources for any purposes.
