Examine and determine the major causes of the global financial crisis (“credit crunch”) of 2008

 

International Business Environment

 

RATIONALE

Every business endeavour or venture is constantly faced with financial management problems to which the owner or manager should be able to attend to in order to take the business to success especially during the times of crisis that the global communities are facing. Thus, key financial decisions normally confronts the managers in issues and problems that concerns financial investments they usually provide answer to the problems regarding the assets on which the company of firm needs to put money and how a chosen investment should be financed.

With this consideration, we may say that the current credit crunch or the so-called credit crisis is one of the problems experienced not only by some firms in the United States but also by the global economy since their cost of capital was affected.  Basically, the current financial crisis of 2007–2009 which is classified by the general media as a “credit crunch” or “credit crisis” was started last 2007 of July.  The crisis was triggered when most investors loss their confidence in the value of securitised mortgages in the United States.  This development created a liquidity crisis that prompted an extensive inoculation of capital into financial markets by the United States Federal Reserve, European Central Bank and Bank of England (Norris, 2007).

 

OBJECTIVE OF THE STUDY

The primary objective of this study is to examine and determine the major causes of the global financial crisis (“credit crunch”) of 2008 onwards. To address this objective, the researcher explores the nature of this crisis by evaluating number of companies in Singapore.

Apparently, a survey to be conducted to SMEs in Singapore aimed to determine their perception towards the current crisis in their respective company/organisation. Furthermore, an interview will be also conducted to know what are their problems and concerns regarding the 2008 credit crunch. Finally, this research comes up with pertinent findings, and provides insightful recommendations on global financial crisis in relation to the development of SMEs in Singapore.

 

RESEARCH QUESTIONS

Generally, the purpose of this study is to conduct a study concerning the impact of global financial crisis to the SMEs in Singapore and identify the perception of the business experts and assess their macro-perspective towards the said crisis. This study will answer the following queries:

1.                    What are the business and financial experts’ perceptions in Singapore regarding the impact of the current global financial crisis in their respective companies?

2.                   What are the variables that significantly affect the perception of the business experts regarding ‘credit crunch’?

3.                   In relation to the impact of the current global financial crisis, to what extent in which some companies would benefit and some face challenges from the ageing population?

4.                   What are the strategies imposed by SMEs in Singapore to counter effect of the current global financial crisis?

 

 

SCOPE AND LIMITATIONS

The study intends to investigate effect of global financial crisis to SMEs in Singapore. For this study, primary research and secondary research will be used. Primary research will be conducted using anonymous questionnaires that will be sent to selected administrative and financial officials of SMEs in Singapore. The questionnaires will be used to collect quantitative data and the interviews will be used to provide qualitative insights into the data collected.

 

 

RESEARCH METHODOLOGY AND TECHNIQUES FOR DATA COLLECTION

Research requires an organised data gathering in order to pinpoint the research philosophies and theories that will be included in the research, the methodology of the research and the instruments of data interpretation. In this study, the Research Process “Onion” will be utilised so that the findings of the study can be thoroughly established. The inner part of the onion describes the methodology portion whereas the outer part discusses the strategies that can be utilised in interpreting the results of the findings.

The descriptive research method uses observation and surveys. In this method, it is possible that the study would be cheap and quick. It could also suggest unanticipated hypotheses. Nonetheless, it would be very hard to rule out alternative explanations and especially infer causations. Thus, this study will use the descriptive approach. This descriptive type of research will utilise observations in the study.  To illustrate the descriptive type of research, Creswell (1994) will guide the researcher when he stated: Descriptive method of research is to gather information about the present existing condition.  The purpose of employing this method is to describe the nature of a situation, as it exists at the time of the study and to explore the cause/s of particular phenomena. The researcher opted to use this kind of research considering the desire of the researcher to obtain first hand data from the respondents so as to formulate rational and sound conclusions and recommendations for the study.

The research described in this document is partly based on quantitative research methods. This permits a flexible and iterative approach. During data gathering the choice and design of methods are constantly modified, based on ongoing analysis. This allows investigation of important new issues and questions as they arise, and allows the investigators to drop unproductive areas of research from the original research plan.

This study also employs qualitative research method, since this research intends to find and build theories that would explain the relationship of one variable with another variable through qualitative elements in research. These qualitative elements does not have standard measures, rather they are behaviour, attitudes, opinions, and beliefs. Furthermore, as we define the qualitative research it is multimethod in focus, involving an interpretative, naturalistic approach to its subject matter. This means that qualitative researchers study things in their natural settings, attempting to make sense of, or interpret phenomena in terms of the meanings people bring to them. Accordingly, qualitative researchers deploy a wide range of interconnected methods, hoping always to get a better fix on the subject matter at hand.

The primary source of data will come from interviews and anonymous questionnaires from SMEs in Singapore.  The primary data frequently gives the detailed definitions of terms and statistical units used in the study. These are usually broken down into finer classifications. The secondary sources of data will come from published articles from social science journals, theses and related studies on personnel management. Acquiring secondary data are more convenient to use because they are already condensed and organised. Moreover, analysis and interpretation are done more easily.

 

 

REFERENCES:

Creswell, JW (1994) Research design. Qualitative and quantitative approaches. Thousand Oaks, California: Sage.

 

Norris, F. 2007, “A New Kind of Bank Run Tests Old Safeguards”. The New York Times. Accessed: 05 April 2010, Available Online at: <http://www.nytimes.com/2007/08/10/business/10liquidity.html?_r=1>

 

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