THE IMPACT OF THE GLOBAL FINANCIAL CRISIS ON ENTREPRENEURSHIP DEVELOPMENT: A COMPARATIVE ANALYSIS OF EUROPE AND AFRICA BETWEEN 2004 -2011

ABSTRACT
The recent global financial crisis of 2007 that began in the USA was caused by a bubble in mortgage industry and ineffective financial regulations. As a result of financial globalization, it spilled over to other economies and caused a global recession. Europe and African nations were not left out as GDP growth rate declined, unemployment increased, currencies depreciated, and trade surplus decreased etc. The researcher undertook a study to examine the impact of the global financial crisis on entrepreneurship development in Europe and Africa. In order to answer the research questions, data were collected from secondary sources showing the effect on different economy with central focus on Europe and Africa region. The research shows a positive relationship between dependent and in-dependent variables. The study also reveals the degree of effects varied across regions and countries due to difference in economic structure. The financial crisis had a common and more general impact on entrepreneurship development which was a decline in new firm start-ups, increased rate of firm failure, slow growth, reduced investment, unemployment, change in productivity for existing firms, and decline in bank support in regards to credit facilities.


TABLE OF CONTENTS

1 Introduction
            1.1 Aim of the research
            1.2 Research Question
            1.3 Description of material
            1.4 Description of method
            1.5 Limitations
            1.6 Technical frame of reference
            1.7 Appropriate background information

2   Overview of the Global Financial Crisis
            2.1 Causes of the Global Financial Crisis
            2.1.1 Failure and ineffective financial regulation
            2.1.2 Corporate governance breakdown and reckless risk taking
            2.1.3 Excessive borrowing by household and Wall Street that put the financial system on a collision course with crisis
            2.1.4 Policy  makers  were  unprepared  for  the  crisis  thereby  showing  lack  of understanding of the financial system
            2.1.5 Systematic breaches in ethics and accountability
            2.2 Macro-economic variables in a recession
            2.2.1 Economic growth and business cycles
            2.2.2 Unemployment
            2.2.3 Inflation
            2.2.4 Current Account Balance
            2.3 Entrepreneurship concept
            2.4 Entrepreneurship development
            2.5 Economic conditions that can affect entrepreneurship opportunities

3 Research Methodology
            3.1 Quantitative research
            3.2 Data analysis
            3.2.1 Statistical Package for Social Science (SPSS)
            3.3 Dependent Variables
            3.4 Independent Variables
            3.5 Validity and Reliability

4   Data presentation and Analysis
            4.1 Findings

5          Discussion and Conclusion
5.1       Discussion
5.2       Conclusion
References


1   INTRODUCTION
The global economy has occasionally been hit by crisis and the most recent, will not be the last. However, certain factors made this the most severe after the Great Depression of the 1930s, which includes financial market failure, macroeconomic problems and implementation of policy shortcomings.

The recent GFC indicates clearly that through financial transactions and international trade, nations have become integrated to the extent that an economic crisis in a nation has negative effect on other nations of the world. The recent crisis is seen as the biggest shock to the global financial market after the great recession in the 1930’s. The GFC has been pervasive and the most recent which started in 2007 was caused by the United States subprime mortgage market. Prior the crisis, the US economy was characterised by flexible credit conditions, low risk management, low risk premium, aggressive lend-ing practices which encouraged financial institutions to lend customer for mortgage. When subprime borrowers began to default due to increased interest rate as well as the prices of houses began to decline, financial institution were forced to repossess the properties. The economic contraction caused a spill-over effect which escalated nega-tively affecting the rest of the world economies and its global financial system. This de-velopment has created some challenges for the entrepreneurs in terms of access to fi-nance, due to changes in the interest rate and inflation rate, a drastic decline in demand for goods and services as well as tightening credit terms which have affected cash flow etc.


Entrepreneurship development in recent times has been regarded as the bedrock and in-gredient to economic stability and development around the globe, considering its impact in creating opportunities and meeting the needs of companies and individuals. The im-portance is recognised globally. It is a contributor to social economic growth and devel-opment by creating employment, enhancing economic development, improving the standard of living, promoting effective domestic utilization, conserving foreign ex-change, creating new market development, and healthy competition as well as being one major contributor to an economy’s GDP which have come from different sectors of the economy.

1.1  Aim of the research

The aim of the research is to determine the extent to which entrepreneurship develop-ment, and activities has been affected by the global financial crisis as well as ascertain the extent of business shock. The broad objective is to identify and analyze key macroe-conomic variables and financial factors that may have adversely impacted the develop-ment of entrepreneurship in Europe and Africa.


1.2  Research Question

1.   What is the effect of the global financial crisis on entrepreneurship in Europe and Af-rica?

2.   What economic variables involved, directly affect the development of entrepreneur-ship in these areas?


1.3  Description of material

The materials needed to carry out this study are gathered from statistical publications from the World Bank, Organization for Economic Co-operation and Development, Eu-ropean Commission, and Global Entrepreneurship Monitor (GEM) etc. The mentioned institution’s have comprehensive data published periodically which are necessary to an-swer the research questions.

1.4  Description of method
For this research, quantitative research methodology is selected. Secondary data collec-tion is selected to collect data and information. To attain the objectives of the research, secondary data will be collected from books and publications on the subject matter as well as publications from the World Bank and the Organization for Economic Co-operation and Development (OECD).

A comparative analysis of inflation, GDP and interest rate and other macroeconomic variables would be done to ascertain the impacts of the global financial crisis on... 

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Item Type: Project Material  |  Attribute: 68 pages  |  Chapters: 1-5
Format: MS Word  |  Price: N3,000  |  Delivery: Within 30Mins.
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