As the global economy recovers from the shockwaves of the recent bank crisis, the big players in the financial industry seem to be emerging victorious, reporting notable profits. However, the same cannot be said for small banks that are still struggling to stay afloat. In this post, we will delve into the current state of the banking sector, exploring how the crisis is affecting smaller financial institutions and what this means for consumers.
Bank Crisis Abating – Big Banks Profit While Small Banks Struggle to Survive
Introduction
The 2008 financial crisis was a harrowing time for many. Banks failed, businesses crumbled, and individuals lost their homes and savings. After the crisis, many looked to the future eagerly awaiting a revival of financial security. And by the end of 2018, experts predicted that the financial crisis had officially abated. While big banks seem to have made a full recovery and are now thriving, small banks still struggle to survive.
Understanding the Banks
When it comes to investing, it’s essential to understand the banks involved. Banks are financial institutions that provide financial services to individuals, businesses, and governments. Banks offer different types of accounts, loans, mortgages, and other financial products. Banks make money from the fees they charge for these services and the interest they receive on loans.
In this article, we will cover the aftermath of the financial crisis for two different types of banks, big banks, and small banks. We’ll also offer investment tips and explain some common terms associated with stock investing.
Big Banks Coming out on Top
Since the crisis, large banks, such as JPMorgan Chase and Bank of America, have made a comeback. These banks have become more prominent, and their profits have escalated. As the industry consolidates, the large banks have been able to buy up smaller banks and acquire other large banks. Consolidation has allowed the larger banks to decrease their expenses and increase profits.
On the other hand, small banks have struggled to stay afloat. In 2019 alone, 21 banks failed, with many more predicted to fail in the coming years. Small banks have the disadvantage of having fewer resources and less access to capital.
Investing Tips
If you’re interested in investing in stocks, it’s essential to understand some common terms used in the industry. Here are a few to get you started.
Dividend Stocks
A dividend is a share of a company’s profit paid to shareholders. Investing in dividend-paying stocks allows you to earn passive income from your investment.
Call Options
Call options allow an investor to bet against the direction of a stock’s price. If you believe the stock price will go down, then you can purchase a call option, which will give you the option to sell your shares at a higher price.
TurboTax Link
If you’re interested in investing, it’s important to plan for taxes. TurboTax offers tax preparation services and can help you maximize your tax benefits.
ClearValue Tax Disclosure
It’s essential to note that ClearValue Tax does not provide tax, legal, or accounting advice. Consult with a licensed professional before making any investment decisions.
Legal Disclosure
The author of this article is not a financial advisor. All investment decisions should be made with the guidance of a licensed professional.
Risks of Investing
Finally, it’s essential to understand that investments can decline in value or disappear. It’s essential to diversify your investments and invest wisely.
Conclusion
While large banks are prospering, small banks are struggling to survive. It’s crucial to understand the banking industry when making investment decisions. Understanding common investment terms and working with a licensed professional can help you make wise investment choices.
