economic development conducted without depletion of earth's natural resources
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what is environmental sustainability?
reducing negative human impact on earth's ecosystem by good environmental management and good demand management
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how can providers contribute to environmental sustainability?
by investing in eco friendly companies and by managing their own consumption of resources such as paper
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what is economic sustainability?
taking steps to reduce undesirable consequences of economic activity
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how can providers contribute to economic sustainability?
banks can do this by not lending to those on low incomes taking out loans for items they dont need and cant afford
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what is social sustainability?
creating communities that foster wellbeing, peace, security and justice for those who live in it
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how can providers contribute to social sustainability?
by setting a good example by putting CSR policies into place or fair trade policies
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what is the financial services system?
system that emerges when indivdiual financial institutions come together in financial markets and create networks between themselves
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if a big bank fails, what's the immediate knock on effect?
triggering failure of other banks and customers of banks would be hit immediately
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what are the consequences of bank failure for individuals wankting to make payments or recieve benefits
wouldnt be able to buy goods or pay bills
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what are the consequences of bank failure for savers
could lose their savings
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what are the consequences of bank failure for borrowers?
wouldnt know what new terms of borrowing are and whther new debts woudl be unaffordable
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what are the consequences of bank failure for businesses?
drop in customer spending and banks reluctant to lend money woudl affect cash flow leading to liquidation and rising unemployment
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what is systemic risk?
refers to risk affecting stability of financial system as a whole- one fialure leads to others failing
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what is financial contagion?
when problems of one institution infect the network and spread to other institutions threatening confidence and sustainability of system as a whole
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whats a sustainable financial services system?
one in which the provision of basic financial services can continue into the future. it's also one that wont fail
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what impact recession does have on government?
fewer people working and paying income tax, fewer people spending and paying VAT, firms making lower profits paying less corporation tax and more money spent on unemployment benefits
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what was the total cost to the government of bailing out the banks?
£94bn in total
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what is liquidation?
termination of a business operation by using its assets to discharge its liabilities settlement
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what is moral hazard?
when a big bank knows it's too big to faila nd expects government to bail it out so makes less than prudential management decisions
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what is the purpose of prudential regulation?
requires banks to make balance sheets safer
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what are liquid assets?
debts owed by banks that will be repaid in future. "Basel III" required banks to have enough cash to pay short term debts over coming 30 days at any given time
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banks must reduce their leverage. what is this?
the more credit banks create, the more risk it is running of not being able to honour debts if things go wrong
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what is provider sustainability?
prudential management of balance sheets and having principles and rules governing how it deals with customers e.g. being sustainable and treating them fairly
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what are stakeholder groups?
people who have an interest in bank's direction, decisions and future
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what are speculators?
people who buy and sell shares of many companies to try and make profits on the deals
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how can directors affect sustainability of providers?
they map out a company's path and determine business model and culture. they shouldnt encourage climate of excessive risk taking
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what is a sustainable product?
one that's designed to meet the long term requirements of those who buy it
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what is perilous debt?
debt on which someone's spending more than half their monthly income on
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what were the reforms outlined in mortgage market review?
.
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what is ethical lending?
lending influenced by sustainability
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what are equator principles?
set of ethical benchmarks for bansk to follow when taking decisions to finance infrastructure projects e.g. dams or pipelines
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what is deleveraging?
when someone stops spening and also begins to save money and uses it to pay off debts
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what are five features of prudential regulation
.
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what is the role of the FCA?
creating a system in which banks can fail in an orderly manner without harming stability of system
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Other cards in this set
Card 2
Front
what is environmental sustainability?
Back
reducing negative human impact on earth's ecosystem by good environmental management and good demand management
Card 3
Front
how can providers contribute to environmental sustainability?
Back
Card 4
Front
what is economic sustainability?
Back
Card 5
Front
how can providers contribute to economic sustainability?
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