Question

How has the dominate market position of large financial firms in the United States been a contributing factor to the recently experienced economic downturn? Explain.

no less than 250 words in length, make at least one reference to your text or other course materials and provide in-text citations. As you reference information from a source, be sure to provide APA citations in text and at the end of your post.

Answer 1

The dominate market position of large financial firms in the United States been a contributing factor to the recently experienced economic downturn because:

1. It conducts monopoly in the market
2. The increase in the price reduces the purchasing of the product
3. The miscellaneous reasons such as infation, recession, etc also affects economic down

The United States of America has the world’s largest national economy. The dollar is the most widely used currency in international trade. The US economy is the mixed economy. Predominately driven by private businesses, the nations GDP has maintained overall growth. The US has witnessed significant downturn in 2008 recession period, causing the US economy to get shrink by 2.8%. But the economy has returned to its sustainable growth since 2010.

Private equity backed companies issued more debt and equity and thus had more options to finance their business. Private equity firms constantly interact with banks raising fund for their portfolio companies. This activity has allowed them to raise debt for their portfolio investment companies during tough period of recession.

There are two main reasons why private equity backed companies gain better access to financing resources. First is the long term time period of privately owned equity investors to support their portfolio companies during the crisis. Another reason is the relationship with the banks.

The down turn has significant impact on small firm. Small firms were deeply affected to economic uncertainty but larger firms affected to certain lesser degree. The major factor was the decline in new investment and associated financing in the face of weak consumer demand for the firm’s product and service.

The strong hold of large business house has protected the US economy. They managed to grow again and gain their position. The companies raised debt and start their businesses again and succeed in doing so. They help the US economy to gain its strength further and contribute again in providing employment opportunities for the US citizens.

Now they have strong base in the economy which will help the economy to not to fall under such crisis again. It is good to learn from the mistakes. So now they are completely prepared for every mis happening.