How the 2007-2010 financial crisis impacted on bank lending : an analysis of how the recent financial crisis impacted inter-bank lending as well as bank lending to customers

Abstract

The global financial turmoil that the world has witnessed during 2007 and 2010 is considered by many financial analysts and economists to have been the worst financial crisis since the Great Depression of the 1930's. The financial crisis hit the main financial centres directly, leaving no economy unharmed. We saw Governments all over the world intervene to protect customer deposits by guaranteeing a minimum amount had the bank they placed their saving with fail. This dissertation is an analysis of bank lending during the financial crisis of 2007-2010. The principal scope of this thesis is to show how banks reacted when lending to each other and to customers over these years. A comparative study for 3 different banks from the United Kingdom, France, Italy and Malta were selected to carry out the analysis. The results obtained show that 'good' banks did not see much difference in lending and borrowing to banks and customers in general. However there was a general increase in provision for bad debt and non-performing loans, nonetheless this provision has improved year on year since the crisis commenced in 2007.