Saturday, 28 September 2013

Graph of the week: 5 years after the crisis

Last two weeks on the blog, much like in the most of the mainstream media, the focus was on the 5 year "anniversary" of the financial crisis. I opened with a text on Fannie and Freddie's reemergence on the housing market, continued with an overview of some causes and implications of the crisis, and topped it up with the end consequences and cross-country effects

So today, to finish off the "crisis coverage", I call upon a series of graphs to illustrate some of the main consequences on the financial system. 

Source: The Economist
The changes are evident in the world of finance. The first two charts show the emergence of Chinese state-backed banks which have managed to break up the dominance of US, UK and European banks, even as the size of top 5 banks' assets has increased (again mainly thanks to the Chinese banks). However, being fully aware of the reasons behind the rapid growth of Chinese banks, they are in for a roller coaster ride similar to the one Lehman has experienced, so we may after all witness the reemergence of the dominance of Western-owned banks in the years to come. 

New higher capital standards (chart 4) have yielded their first effects, lowering the average return on equity (chart 3), and lowering credit availability to the private sector, particularly the SMEs, as I predicted they would do back in 2011. Compensations have fallen as a result of cross-country anti-banking hysteria, and even though employment in the financial sector has decreased in New York, London and Hong Kong have kept their high numbers. As I've concluded previously, none of this suggests that the world of finance is safer than before, it's just different. Different good or different bad, only time will tell. 

Crisis coverage:

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