Question

Evaluation the Northern Rock is nationalised, which is good or bad？ why ? (at least 150 words)

Answer 1

Northern Rock Bank was nationalised after the mortgage crisis that shook the global economic world in 2008. Nationalising typically means transferring a privately owned firm to the public sector. Nationalisation of banks has both advantages and set of disadvantages to it. When the bank's assets turn toxic due to subprime underlying securities , the government intervenes to protect it from sinking which otherwise will harm the financial ecosystem of the country ,which supports nationalisation of a bank in case of a severe financial crisis. Banks are intertwined and if the big bank collapses, then a lot of the other banks will have to bear the burnt. The other side of the argument which did favour the nationalisation of Northern Bank was that it killed competition. When the government infuses funds into a private entity, then they attract more share of the market by offering products at cheaper rates. Also, given government bureaucracy it is difficult to manage a large financial institution like a bank which serves public in a major way.