Iceland Banks during/before recession in 2008 claimed that they were earning more profits with lower risk,...

Iceland Banks during/before recession in 2008 claimed that they were earning more profits with lower risk, but others argued that banks were earning more profits with higher risk. Why does this distinction matter? What would be the impact in the financial sector and potentially the economy as a whole if this continues?

Expert Solution

The main reason for this strategy is that the bank earning more profit and telling that there is less risk because they do not want to tell whole world that they are gaining more with risk otherwise the investors does not hold the funds Iceland bank expended their retail service in Europe. You spend more money when you feel richer the same happening with bank at that time. The Iceland financial crisis was a main economic and political happening in Iceland that intricate the avoidance of all three of the country's main secretly owned marketable banks in late 2008, their hitches in refinancing their short-term debt and a run on deposits in the Netherlands and the United Kingdom this is as per there size of the economy, Iceland's systemic banking breakdown was the biggest experienced by any country in economic history. This is the main reason that the Iceland Banks during/before recession in 2008 claimed that they were earning more profits with lower risk, but others argued that banks were earning more profits with higher risk.

Impact In the Financial Sector

1. Impact on the GDP

2.The stock market fell down with 95%

3.Iceland fishing industry is opposed.

Rahul Sunny answered 3 years ago

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