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Business Policy and Strategy (SMUnit 2 of 3-4)

Essay Instructions:

Identify five key economic variables that could represent major opportunities or threats to a bank in your town or city. Identify which that you believe to be most important, and describe at least one strategic response. Your response should be at least 200 words in length. All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations.

Essay Sample Content Preview:

BBA 4951, Business Policy and Strategy
SMUNIT 2 of 3-Economic variables affecting banks
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Economic factors affect banks, and one of the main variables is unemployment levels in the county and state. Even though, people may bank their money from anywhere, an increase in unemployment rate in the state reduces the level of savings and disposable income among local residents. This also leads to reduced growth in businesses because of decrease in demand in goods and services. Thus, the banks hold less money and cannot lend to get profit from loans.
Change in income levels also affects the performance of banks, because the fall in disposable income arises during rising unemployment, and in times of inflation there is also low demand for banking services and vice versa.
There is a gradual shift in the demographics with more people retiring, and hence the banking industry is optimistic that in the short term there will be increased business opportunities. Older people tend to be more financially stable after years of working and likely hold money through investments.
Tax laws and increa...
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