Answer to Question #255615 in Finance for favor

Question

Explain using suitable examples how covid_19 has changed the risks dynamics of the global economy and give the lessons learnt for the banking sector( 10 marks)

Answer 1

Covid 19 impacts on global economy

I.World stocks were affected whereby the global economy contracted by 12% between January and March 2020.

ii.A loss of jobs was witnessed where about 293,000 jobs were lost.

iii. European Central Bank encouraged flexibility on shares of bonds it buys from other countries.

iv. African countries faced a soaring borrowing costs.

Covid 19 on banking sector

i. Those firms and people stopped working might not be able to repay loans.

ii.Banks were negatively affected as bonds and other financial services bhave lost value.

iii. Banks are facing increasing demand for credit.

iv. Banks are facing lower non interest revenues due to lower demand for their services