Topic 4 Flashcards
What is meant by “mass media”?
refers to a range of sources providing news and information, including:
• Television and radio (broadcast media)
• Newspapers and journals (print media)
• Websites, blogs, and social media
How do different types of media report financial stories?
A: The coverage depends on the media’s audience:
• Mainstream financial stories are reported widely across all types of media
• Smaller, technical stories often appear only in specialist media
• Some sources publish daily, others weekly or monthly
What is one benefit of the wide choice of news media available today?
A: It allows people to gather various perspectives on a story and form a balanced opinion
What is the common research approach for many media consumers?
A: Many people limit their research to:
• A single, regularly read newspaper (either print or online)
• Two or three familiar television channels
What risk arises from relying on a limited number of news sources?
A: Different media sources often treat the same issue in very different ways, based on:
• Political stance
• Economic or social agenda
• Characteristics of their target audience
How does media bias affect financial reporting?
A: Each media organization often puts forward its own subjective point of view, leading to bias in reporting
The print media
-What is the financial press, and who is its target audience?
A: The financial press targets financially literate individuals and industry practitioners. It is factual, technical, analytical, and conservative, focusing on data, graphics, and analysis to predict likely consequences of financial issues
The print media
-What characterizes the language and approach of the financial press?
A: It uses technical language and financial terminology, assuming readers understand industry jargon. It rarely questions the underlying economic model and tends to focus on business impacts rather than personal effects — for example, analyzing how unemployment affects business profits over individuals’ living standards
The print media
- What is the broadsheet press, and how does it differ from the financial press?
A: The broadsheet press e.g The Times, takes a less technical approach but offers in-depth coverage with a serious tone. It often has a political agenda and reflects those leanings in financial reporting
The print media
- What types of financial articles are common in the broadsheet press?
A: They cover two main areas:
• Macroeconomic reporting (company results, share prices, industrial news)
• Personal finance (targeting higher-income readers)
The print media
- Can you give an example of the broadsheet press’s financial reporting?
A: In January 2021, The Telegraph reported on house prices falling due to the Covid-19 stamp duty cut and identified the top five ‘value’ stocks to buy
The print media
- What is the middle-market press, and how does it balance content?
A: Middle-market papers e.g Daily Mail, offer stories that are less technical than the financial press but longer and more complex than tabloid content. They aim to inform readers without sensationalizing
The print media
- How does the Daily Mail cater to readers’ financial interests?
A: It includes a “Money” section, covering specialized topics like saving, banking, investing, pensions, and offering practical financial advice
The print media
- Can you give an example of the middle-market press’s financial advice?
A: In January 2021, the Daily Mail provided articles on the best-buy cash ISAs, tips on avoiding the stamp duty cut, and advice on getting better deals with local building societies
The print media
-What are the characteristics of the tabloid press?
A: The tabloid press, including The Sun and Daily Star, caters to readers interested in celebrity gossip and sensational crime stories rather than financial issues. Their stories are short, use idiomatic words, have a chatty and colloquial writing style, and are generally conservative in their views
The print media
- How does the tabloid press cover financial journalism?
A: They focus on media battles against high executive salaries and bonuses, labeling executives as “fat cats.” However, their priority is entertainment-based news. For example, The Sun covered facts about school meal vouchers but prioritized a story about singer Robbie Williams quarantining in the Caribbean due to Covid-19
Financial services in print media
What is the hierarchy of newspapers regarding financial services coverage?
A: There is a hierarchy based on the expected financial knowledge of their readership:
1. Financial press (e.g., Financial Times) – In-depth financial analysis
2. Broadsheet press – Serious news coverage, including finance
3. Middle-market press – A mix of entertainment and serious news
4. Tabloid press – Sensational and celebrity-focused content
How did The Sun approach financial reporting in 2014?
A: The Sun ran a series by astrologer Mystic Meg, predicting financial futures based on astrology rather than serious financial analysis. One of her predictions was:
For some lucky individuals, generous Jupiter and strict Saturn could catapult you onto the rich list. But for others, the next 12 months should be spent watching the pennies.”
This demonstrates the lack of serious financial journalism in tabloids
How does the financial press differ from tabloids in financial reporting?
A: Newspapers like the Financial Times (FT) provide in-depth financial journalism. For example, on January 8, 2014, FT covered the rivalry between Swiss banks UBS and Credit Suisse, analyzing their experiences during the financial crisis and their future prospects—topics mostly relevant to financial professionals rather than the general public
What role do magazines and journals play in financial journalism?
They are generally aimed at specific market segments, such as young women, music lovers, or anglers. Some specialize in finance, money, or investment and contain articles relevant to particular readerships
How can financial magazines and journals be accessed?
A: Many magazines and journals provide online access to their articles, either for free or for a fee. Examples of financial magazines with free-access websites include MoneyWeek and Moneywise, which offer a broad range of articles and reports on financial topics
The broadcast media
What is meant by “broadcast media” in financial journalism?
A: Broadcast media includes television and radio, offering financial reporting through news bulletins, specialist programs, and general news broadcasts
Why is broadcast media considered complex?
A: It is complex due to the large number of channels, each with its own agenda and target audience. Large broadcasters like BBC and Sky operate multiple channels featuring a wide range of programs, including those focused on financial matters
What are examples of 24-hour international news channels that report on financial topics?
A:
• Al Jazeera (Qatar)
• France 24 (France)
• Russia Today (Russia)
• CNN (United States)
Each of these channels features a dedicated segment on business and financial news
How does radio contribute to financial journalism?
A: Many radio channels mix music with news reports. Examples include:
• BBC Radio 1 & Classic FM – Primarily music-focused with news updates.
• BBC Radio 4 – A factual news network that provides downloadable content
What financial program does BBC Radio 4 offer?
A: BBC Radio 4 airs Money Box, which provides advice on personal finance topics and helps listeners understand potential financial issues related to certain products
How can people access financial news from broadcast media online?
A: Many programs have websites offering:
• Text versions of news stories
• Audio and video clips
• Additional downloads such as podcasts
Blogs and social media
-What are the characteristics of blogs covering financial and economic themes?
A: Blogs vary in style, approach, and reliability. Some are written by academics with well-supported arguments, while others are opinion-based pieces by individuals. Some blogs express extreme views and are less known
What advantage do blogs offer in financial journalism?
A: Blogs allow readers to respond and engage in discussions with both bloggers and other followers, creating an interactive financial discourse
How does social media contribute to financial discussions?
A: Social media provides a platform for sharing opinions and discussing financial concerns. Many people and financial institutions actively engage on social media
According to a 2012 report, how were financial firms using social media?
A: More than 90 financial services firms used platforms like Twitter and Facebook for recruitment, customer service, and PR purposes (Taylor, 2012)
What is the percentage breakdown of social media usage by financial services firms?
A:
• Twitter: 43%
• Facebook: 28%
• LinkedIn: 18%
• Instagram: 11%
What is a think tank, and what is its purpose?
is a specialist body set up to research and report on issues within a chosen area. They can be government-funded, politically affiliated, or run by pressure groups and charities
What does the Resolution Foundation focus on?
A: It aims to improve living standards for low-to-middle-income UK households through research and policy development. It is funded by the Resolution Trust and supported by the Barrow Cadbury Trust
What financial issue did the Centre for Social Justice report on in 2013?
A: Their report, Maxed out: Serious personal debt in Britain, found that:
• The average UK household debt was £54,000, nearly double what it was ten years earlier.
• The poorest 10% of UK households had debts four times their annual income.
• Monthly debt repayments were nearly half of their gross income
How does the Centre for Social Justice address financial exclusion?
A: The Centre supports digital technologies like apps and programs to help financially excluded individuals
What role does financial media play in reporting financial matters?
A: The media informs the public and sparks debate. Financial services providers actively monitor media reports due to their influence, employing PR teams to manage negative publicity
Extreme Reporting vs. Balanced View
- Why do financial services firms closely monitor financial news?
A: Negative media coverage can damage their reputation. If firms need to defend themselves, it indicates the media is doing its job in holding them accountable
Extreme Reporting vs. Balanced View
- the meaning of media bias
Why do financial services firms closely monitor financial news?
A: Negative media coverage can damage their reputation. If firms need to defend themselves, it indicates the media is doing its job in holding them accountable
How does media bias affect financial news reporting?
A: Different media outlets report the same story in different ways, shaping public perception. Media bias occurs when reports reflect political or commercial agendas rather than presenting neutral facts
Why should viewers be aware of media bias in financial news?
A: Some media deliberately aim to influence opinions, so readers should use critical thinking to identify misleading or one-sided reporting
What is a subjective financial report?
A: A subjective report reflects the journalist’s or media outlet’s viewpoint, aiming to persuade readers rather than present a balanced argument.
What are financial blogs, and how do they differ in style and reliability?
A: Financial blogs vary in style, approach, and reliability. Some are academic with supported views, while others are opinion-based by individuals. Some may express extreme views
What is a key advantage of blogging in finance?
A: It allows interaction; readers can respond to views, creating discussions
Why do financial services firms use social media?
A: For recruitment, customer service, and PR purposes
According to McIlwain (2017), which social media platform is most used by financial services firms?
A: Twitter (43%), followed by Facebook (28%), LinkedIn (18%), and Instagram (11%).
According to McIlwain (2017), which social media platform is most used by financial services firms?
A: Twitter (43%), followed by Facebook (28%), LinkedIn (18%), and Instagram (11%).
What is a ‘think tank’?
A: A specialist body that researches and reports on issues, sometimes set up by governments, political parties, or interest groups
What does the Resolution Foundation focus on?
A: Improving living standards for low-to-middle-income groups in the UK through research and policy development
What was the Resolution Foundation’s 2013 report about?
A: It warned that rising interest rates could push millions into ‘perilous debt,’ where over half of income is spent on debt repayments
What did the Centre for Social Justice’s report “Maxed Out” reveal about UK household debt?
: The average UK household debt was £54,000—almost twice the level from ten years prior. The poorest 10% had debts equal to four times their annual income
What issue did the Centre for Social Justice highlight regarding financial exclusion?
A: The poorest in the UK were cut off from mainstream banking, worsening financial exclusion
- methods of practising media bias
What is media bias?
A: The way a news story is reported influences perceptions. Bias occurs when news is reported in a misleading, one-sided, or incomplete manner
What is the difference between subjective and objective reporting?
A: - Subjective reports aim to persuade and present only one side.
• Objective reports present both sides and conclude with a balanced view
How do journalists influence news through selection?
A: They choose which facts to present and which to omit, often favoring their preferred narrative
How can bias emerge in media comments?
A: A journalist may quote a person agreeing with their viewpoint while ignoring opposing views
Why might media outlets present biased reports?
A: To align with the values and political beliefs of their audience, increase readership, or serve an agenda
What are common ways media bias appears?
A: - Use of “we” and “us” to imply universal agreement.
• Spinning negative stories to favor a particular political party or company.
• Race and gender bias in reporting.
• Using selective expert opinions to promote one side.
• Presenting industry-funded reports without disclosing conflicts of interest.
• Focusing heavily on certain financial issues while ignoring others.
• Omission of stories that do not align with the media outlet’s agenda
Give an example of media bias from the BBC News (2013a) report on British Gas.
A: The report highlighted British Gas raising prices by 6% but emphasized that its profit margins were low to minimize negative perceptions
Why is it important to consider multiple media sources?
A: To get a balanced perspective and avoid falling for one-sided or misleading reporting
-simplification and exaggeration
Why are financial services complex for consumers to understand?
A: Financial services are complex by nature, and many consumers lack the financial knowledge to understand terms and conditions of products like mortgages and pensions. Companies like banks and insurance providers often add complications to differentiate their brands, which makes choosing even simple products (e.g., current accounts, personal loans) difficult for consumers.
How do banks differ from companies that produce physical goods?
A: Banks have unique balance sheets and compliance rules. The financial system is a complex network of interconnected trades happening daily, governed by specialized rules and sophisticated securities. Most people struggle to understand that a significant portion of money in circulation has no physical presence and is created when banks provide loans
How does the media contribute to misunderstandings during financial crises?
A: The media often simplifies complex financial events to make them comprehensible, sometimes omitting essential context. This can lead to exaggerated conclusions that seem credible and shocking, influencing public perception negatively
What was one criticism of banks during the early financial crisis?
A: Banks were criticized for borrowing money from depositors for short periods and lending it to borrowers for longer periods. Though this is a normal practice, the media labeled it “reckless” without providing proper context. This led to a trend of “bashing the banks,” affecting their reputation and even impacting junior staff
How did media influence public confidence in the financial system during the crisis?
A: Media oversimplification and negative reporting eroded public confidence. While banks engaged in some bad practices, the lack of balanced reporting worsened the situation. Financial providers later struggled to rebuild trust and had to use media to restore customer relationships
-the media’s role in forming the financial culture
What role does the media play in shaping financial culture?
A: Media doesn’t just report but actively shapes opinions, expectations, and behaviors. By promoting existing practices and reinforcing trends, they impact the sustainability of financial services and the overall financial system
How did the media influence consumer borrowing behavior before the financial crisis?
A: Media promoted a consumer culture that encouraged borrowing for luxury lifestyles—like owning homes, buying cars, and going on foreign holidays. Advertisements and TV shows glamorized high-spending lifestyles, while commercial channels promoted credit products, making it seem normal to finance these ‘wants’ with debt
Why is borrowing to finance ‘wants’ considered unsustainable, and how did media contribute to this trend?
A: Borrowing for non-essential luxuries is unsustainable, but media portrayal made it seem normal and desirable. Seeing celebrities living lavishly and frequent advertisements promoting easy credit created social pressure, making unsustainable borrowing patterns seem acceptable
- the media and the financial crisis
How did the media cover the 2007-08 financial crisis?
A: The media provided extensive coverage, ranging from immediate “breaking news” reports to deeper analyses discussing the causes, implications, and predictions about the crisis’s outcomes. Although the initial triggers of the crisis were independent of the media, the way news was reported influenced its development
What major event in September 2007 marked the beginning of the crisis, and how did the media impact it?
A: The collapse of Northern Rock was a significant event. Media coverage, including images of long customer queues withdrawing money, was criticized for fueling panic and accelerating the bank’s downfall. Critics argued that such reporting undermined public confidence, worsening the situation
Why was the BBC criticized for its reporting on Northern Rock?
A: Critics claimed that the BBC, particularly journalist Robert Peston, contributed to public panic by reporting on the crisis, which led people to rush to withdraw their savings. However, the BBC defended its actions, arguing that it was fulfilling its public duty to inform people, who might have panicked regardless
What challenges do financial service providers face in the modern media landscape?
A: In a 24-hour news cycle with instant television and internet access, news spreads quickly. Journalists, driven by the need for exclusive stories, can unintentionally amplify crises. This makes it challenging for financial providers to manage information and prevent misinformation
How can media coverage be both positive and negative for consumers and financial services?
A: Positively, media can keep consumers better informed, encouraging them to demand improved services, thus promoting sustainability. Negatively, rapid or incorrect reporting can spread panic and harm confidence in financial institutions, which threatens sustainability
What is the conclusion about the media’s role during financial crises?
A: While the media is a crucial part of society, providing valuable information, it must report responsibly. Inaccurate or exaggerated reporting can threaten financial sustainability by fostering unnecessary panic
How does fast-spreading news affect the sustainability of financial services?
A: Quick dissemination of information can be beneficial by informing consumers. However, if the information is partial or incorrect, it can lead to rapid loss of confidence and harm the long-term sustainability of financial services
BEHIND THE HEADLINES
Why have banks been heavily criticized in the media following the 2007-08 financial crisis?
Answer:
• Banks were accused of irresponsible lending and malpractice before the financial crisis.
• Many financial scandals have since come to light, with banks being fined for unethical practices.
• New cases of malpractice continue to emerge.
• The financial sector has struggled to rebuild its reputation
- irresponsible lending
What led to the issue of irresponsible lending before the 2007-08 financial crisis?
Answer:
• Banks lent money too easily and too cheaply to people who could not afford repayments.
• Heavy spending on marketing loans encouraged excessive borrowing.
• Relationship management teams focused on sales targets instead of customer welfare
What were the consequences of irresponsible lending before the financial crisis?
Answer:
• Increased demand for goods and services, especially property, led to rising house prices.
• When interest rates rose, many borrowers defaulted on their loans.
• The market crashed, leading to economic turmoil.
• Banks developed a reputation for aggressive selling tactics rather than prioritizing customer interests
How have banks tried to recover from the financial scandal of irresponsible lending?
Answer:
• Banks have worked to restore their reputation by changing policies and practices.
• They have faced fines and legal consequences for past malpractice.
• The financial sector continues to be scrutinized for ethical banking practices.
- payment protection insurance (PPI)
What is Payment Protection Insurance (PPI), and why was it sold?
Answer:
• PPI was designed to protect borrowers by covering debt payments in case of unemployment or illness.
• It was often mis-sold to customers who did not need it or were ineligible.
• Some banks pressured customers to purchase PPI by falsely claiming loans would not be granted without it
What were the consequences of the PPI mis-selling scandal?
Answer:
• The scandal received heavy media attention, leading to widespread public awareness.
• The financial sector faced huge embarrassment.
• Banks were forced to compensate affected customers.
• The total cost to banks reached nearly £40 billion in compensation (FCA, 2021)
- The Libor scandal
What was the Libor scandal, and how did it occur?
Answer:
• Banks manipulated the London Interbank Offered Rate (Libor), which is the interest rate banks charge when borrowing from each other.
• Traders in banks’ trading departments falsified information to push Libor rates up or down to benefit their own trades.
• This practice, known as market rigging, is illegal and led to fines for banks involved.
• Libor is being replaced by Sonia (Sterling Overnight Index Average) due to this scandal
What were the impacts of the Libor scandal?
Answer:
• Further damaged public trust in banks.
• Manipulated rates allowed banks to borrow money more cheaply, but pension funds and other institutions suffered financial losses due to lower returns.
• Millions of people were financially impacted.
• Regulators imposed fines, but lawsuits for compensation could cost even more
- other articles
What banking system failures have been covered in the media?
Answer:
• Banks have experienced computer system failures, money laundering failures, and non-compliance with regulations.
• Examples:
• RBS (Royal Bank of Scotland) faced a major computer error on Cyber Monday 2013, affecting customers using credit and debit cards.
• A June 2012 glitch left 13 million customers of RBS, NatWest, and Ulster Bank unable to access their money.
• In 2015, HSBC suffered a similar major banking failure
What were the consequences of banking system failures?
Answer:
• Customers were unable to use their bank accounts, causing inconvenience and financial stress.
• Public trust in banks declined further due to repeated failures.
• There were calls for banks to improve their technology to prevent future issues.
• The incidents highlighted banks’ lack of investment in sustainable, secure systems
How has media coverage influenced public perception of banking scandals?
Answer:
• Some reports exaggerate banking failures, but the exposure raises awareness of unethical banking practices.
• Scandals force banks to be held accountable for poor behavior.
• Public pressure may encourage banks to act more prudently and invest in reliable systems
THE MEDIA AS WATCHDOG
How does the media act as a watchdog in financial matters?
Answer:
• Many newspapers have specialist sections covering financial issues.
• The media takes on the role of the “voice of the people” against big businesses.
• Investigative journalism helps expose unethical financial practices (e.g., mis-selling of PPI).
• Current concerns include the rise of Buy Now Pay Later (BNPL) services, which many consumers do not recognize as debt
How does the media help consumers in financial matters?
Answer:
• Media champions consumer rights by exposing unethical business practices.
• Scandals drive traffic to news outlets, making it commercially beneficial for media to report on them.
• The media is in a strong position to influence public perception and put pressure on financial institutions.
• U.S. research shows that people increasingly see the media as a financial watchdog
How does the financial trade press differ from general media in its approach to financial scandals?
Answer:
• The financial trade press often takes a defensive stance, protecting businesses.
• It primarily quotes industry leaders who aim to protect their own interests.
• General media, in contrast, tends to side with consumers, exposing unethical practices
- Perceptions of the Press as a Watchdog
What does Pew Research (2013) reveal about public perceptions of the media as a financial watchdog?
Answer:
• Over time, the percentage of people who believe the press:
• “Keeps leaders from doing things that should not be done” has declined but remains significant.
• “Gets facts straight” has fluctuated, showing some trust issues.
• “Is independent” and “Is fair to all sides” has declined significantly, indicating skepticism
- teaser rates
What are teaser rates in banking?
Answer:
• Teaser rates refer to temporary higher interest rates offered on savings accounts to attract new customers.
• These rates last for a limited period (e.g., six months or a year) before reverting to a much lower standard rate.
• Example: A ‘Basic Saver’ account might offer 0.3% for the first year (including a 0.1% introductory bonus), then drop to 0.2% after the bonus expires
How do teaser rates affect customers?
Answer:
• Many customers do not realize the initial interest rate is temporary.
• Terms and conditions are often in small print and not clearly explained.
• Customers may become angry when they later discover they are earning less interest than expected.
• This practice has led to calls for better transparency in banking
How has the media exposed teaser rate practices?
Answer:
• Media reports classify introductory bonus rates as “teaser rates.”
• Reports acknowledge that offering bonus rates is legal, but argue that banks should:
• Notify customers before the bonus period ends.
• Give customers a chance to switch accounts if they wish.
• Public pressure from media exposure has forced banks to change practices
How did banks respond to media criticism of teaser rates?
Answer:
• In 2014, RBS and NatWest stopped offering teaser rates to regain customer trust.
• This decision was influenced by negative media coverage and consumer dissatisfaction.
• The banking industry has faced greater scrutiny regarding transparency in savings products
How does media influence financial regulation and corporate behavior?
Answer:
• Brings bad practices to public attention, pressuring providers to change.
• Alerts financial regulators to the need for tighter consumer protection rules.
• Helps individual consumers and small businesses challenge powerful financial institutions.
• Provides the public with clear, accessible financial information, improving transparency in banking
Media organisations write their news reports:
Subjectively
Objectively
Without bias
Overtly
Subjectively
An example of a middle-market newspaper is:
The sun
The times
Daily mail
The telegraph
Daily mail
Money week is:
A blog
A financial magazine
A radio programme
A TV programme
A financial magazine
The radio 4 programme that focuses on personal finance is:
Money box
Money observer
Financial Times
Monet box
A media company choosing not to cover a story because it is against the company’s business interests to do so is an example of:
Omission bias
Perception bias
Expert bias
Bias
Omission bias
A technical analysis of the impact of a change in corporation tax is most likely to appear in the:
Daily mirror
Daily express
The sun
Financial Times
Financial Times
The role played by the mass media can be described as:
Active
Passive
Unbiased
Biased
Active
Prior to the financial crisis of 2007, banks were:
a. Increasing the cost of their loans
b. Tightening their lending policies
c. Lending money much too early
d. run effectively
C
One of the reasons the payment protection insurance scandalous arose was because:
A. Payment protection insurance was not a sustainable product
B. Payment protection insurance was overpriced
C. Payment protection insurance was being sold as a condition of being granted a loan
C
The Libor scandal was a form of:
A. Market rigging
B. Money laundering
C. Nsider dealing
A
Financial services companies are prevented by their regulator from using social media
False
True
False
Newspapers, television and radio sometimes play the positive role of acting as consumer watchdog
False
True
True
