In: Operations Management
1.ABC Bank is facing a financial crisis due to the simultaneous run of customers to the bank to convert their deposits in cash. With this situation, explain in your own words the reasons that drove the depositors to act in such a way. Assume you’re a top manager at the bank; explain what are the options that the management has that will save them from being insolvent due to the massive withdrawals. And Financial institutions in Bahrain are highly regulated and monitored by the CBB. In your own words, explain how the CBB applies regulatory and monitoring authority in order to manage the financial institutions in the Kingdom. For your answer, refer to the current situation that is taking place; explain how does and will the CBB help protect the economy of the Kingdom. Furthermore, There are many situations that may contribute to the inflation of an economy where the volatility and uncertainty can lead to lower levels of investments. With regards to the current situation that is taking place around the world, many stores and businesses in the Kingdom of Bahrain and around the world were faced to close their doors to customers for at least two weeks. Explain in your own words, how these businesses and financial institutions will make up for the losses they are or may face. Will these businesses and financial institutions cause inflation within the economy? Explain. And Monopoly is a market structure characterized by a single seller, selling a unique product in the market. In a monopoly market, the seller faces no competition, as he is the sole seller of goods with no close substitute. Monopoly typically has an unfair advantage since they are either the only provider of a product or control most of the market share or customers for the product. Although monopolies might differ from industry-to-industry, they tend to share similar characteristics. Discuss at least three (3) of these characteristics in your own words. Moreover, Over the short term, the financial crisis of 2008 affected the banking sector by causing banks to lose money on mortgage defaults, interbank lending to freeze, and credit to consumers and businesses to dry up. For the much longer term, the financial crisis impacted banking by spawning new regulatory actions. Furthermore, some believe that commercial banks where more fragile during the crisis which made them at more risk of a bank run. In your opinion, discuss whether you agree or not and why.
CBB = central bank.
Answer:
At the point when an enormous number of investors tend to pull back their money from the bank at a similar purpose of time, it is called Bank Run. The reasons that drove the contributors to act in such a manner could be as under -
The choices that the administration has that will spare them from being wiped out because of the monstrous withdrawals can be -