Investor Confidence and Organizational Downsizing in Financial Institutions
8 Pages Posted: 11 Mar 2009
Date Written: February 2, 2009
Abstract
This paper aims innovative perspectives on strategy development in financial institutions to overcome the current global financial recession. Organizational restructuring is argued in reference to proactive and reactive financial and human resource strategies. It is observed that growth of many financial institutions is jeopardized due to primary market downfall, falling investor confidence, liquidity crisis, misjudged lending, high operational costs and blurring corporate image among markets. Authors suggest proactive and reactive measures which may be employed in responding to the current financial crisis. Among many proactive roll-on strategies, banks need to urge government to provide a guarantee that bonds and securities created out of mortgages or out of loans to companies do not become irrecoverable and seize yielding. Financial institutions may manage human resource during the period of economic crisis in a financial institution is to pursue defensive downsizing rather than strategic restructuring, as a result of both internal and external constraints on restructuring strategies.
Keywords: Lending policies, investor confidence, outsourcing, defensive downsizing, risk management, cost effectiveness
JEL Classification: E 50, F 34, O15, O16
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