Industry experts place the blame for the credit crunch squarely on the consumers.
In a poll of asset managers, investment bankers, consultants and other industry participants, nearly 70 percent of respondents cited “excessive consumer credit and mortgage debt” as one of the Top 5 causes, while 35 percent said it was the No. 1 cause.
The survey produced by Terrapinn in conjunction with the Cass Business School at City University London polled 881 members of the financial industry about the causes of the credit crisis and the future of the sector.
Excessive leveraging by banks, financial deregulation or inappropriate regulation, over-inflated ratings for financial products and weakness of internal control were also partly to blame. Interestingly, the global housing bubble fell below many of the other causes.
Roughly 90 percent of respondents said investment banks are the organisations requiring the most substantial change, in a year when many of the US investment banks simply disappeared.
The poll also showed that almost 60 percent of the industry insiders fear a lack of liquidity will present the biggest problem in 2009, followed by deleveraginh, corporate loan losses and counterparty risk.
Looking ahead, the poll asked what financial services would become more important in 2009. Transaction and cash management, Islamic finance, private and corporate banking and asset management topped the list. The more complicated and innovative services such as securitisation and structured products as well as leveraged finance were near the bottom.
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