An Analysis into the Effectiveness of Margin Financing – A UK Based Exploratory Study (2012)

Financial markets have been growing and shall continue to grow even on rebound because fiscal and monetary policies globally are interlinked. Economic output cannot be planned or curtailed without support from money market. The origins of margin financing can be traced back to the mid 70s and early 80s when the financial markets of securities and stocks actually were on the rise.

These were times of excess liquidity and growing, booming economy on the back of population explosion. World was in the moment of adding 2 billion in the next 3 decades and opportunity for growth and investment were everywhere. This is where the stock markets grew on the back of industrial and manufacturing sector growth. Business avenues raise money and profit and when that is happening people look towards securitization of their investments. This led to development of derivatives and the eventuality was margin financing which was means for investors, buyers to leverage their position without actually having the money.

This in a way was a big drawback because money was coming from some place and the commodity in question either was being overprices or under priced. Hence in case of profit or loss wealth was being created or was being eroded based on speculative assumptions which are categorically labeled as the reasons for major financial problems as existent today. Purpose of the study would be to identify the key parameters which should be avoided while opting for such speculation so as to ensure safeguard of public and private equity.

The objectives of this study are:

  • To explore the future outlook and scope of margin financing
  • To explore the future prospects and scope of margin financing specifically in UK
  • To provide better recommendations to financial firms to take advantage of margin
  • 16,000 words – 58 pages in length
  • Good use of literature
  • Well written throughout
  • Good in depth analysis
  • Includes questionnaire
  • Ideal for finance students

1: Introduction
Background to financial markets
Working of financial markets
Margin Financing
How marginal finance takes place?
Margin lending – Who is likely to find a Margin loan suitable?
Margin Financing Through Brokers
Types of Marginal Requirements
Risks of margin finance
Problem Statement
Scope of study

2 – Literature Review
Significance and scope of the Margin Financing
Regulation T
Legislative History of Marginal Financing
Margin financing developments

3: Research Methodology
Quantitative Research Methodology
Qualitative Research Methodology
Research Method
Research Design
Data Collection
Primary Data Collection
Designing the queries of the Questionnaire
Process of Collecting Primary Data
Secondary Data Collection

4: Analysis of the Study
Questionnaire Data Analysis

5: Conclusion of the Study
Discussion based on objectives of research
Future Recommendations


Research Questionnaire

Margin Financing Dissertation
Margin Financing Dissertation

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