Abstract:
The primary purpose of this study
is to find out the impacts of the financial crisis on the
profitability of UK banks by collecting and analyzing panel
data from five well-known banks from 2003 to 2012. A
quantitative research approach is applied to the study, and
secondary financial data is analyzed using T-tests for all
five UK banks. ROCE, ROA, LIQUIDITY, GEARING, ROSHF, and
PBFIT are measured to determine the profitability performance
of UK banks. The effect of capital adequacy, managerial
efficiency, bank size, earning quality, loan performance,
asset quality, and liquidity is also explained to have a
better understanding of the profitability measures of the
banks. The empirical results indicate that macroeconomic and
microeconomic factors were the leading causes of the
financial crisis after the US subprime mortgage in 2007.
Secondary data is collected from different sources, including
the banks' annual reports, and analyzed using descriptive
statistics on the profitability of the five UK banks. T-tests
are applied to have thorough information about the
profitability performance of the banks. The data collected is
from reliable sources, and efforts are made to minimize the
risk of prejudice. The strategies used by the banks did
little to prevent the losses, and effective policies must be
adopted to avoid unexpected events such as financial crises
in the future. The UK banking sector is severely affected by
the financial crisis, and the main reasons for that are the
irregularities within the banks and the greediness of the
banks' management. The management bodies of the banks must
endeavor to reinforce the recognized important factors, and
government bodies should review the adopted policies to
provide a safer financial environment to the banks.
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