Got a tricky question? Receive an answer from students like you! Try us!

Financial Markets: Distinguishing between international banking and global banking - Assignment Example

Only on StudentShare
Finance & Accounting
Pages 12 (3012 words)


Distinguishing between international banking and global banking is a difficult task owing to similarity of identities in their application as the two concepts look analogous in a general sense. However, when a micro level examination of the functioning of the fund management system is carried out, it is clear to identify the diverging point of both streams…

Extract of sample
Financial Markets: Distinguishing between international banking and global banking

Straightly speaking, international banking deals with collection funds in favor of a target client in a foreign country while global banking refers to gathering funds for financing the claims of foreign borrowers from within the same country.
Business transactions of both of them differ in the function fund distribution and risk allocation strategy. International banking borrows directly from another country; in this regard, the lender country collects funds by obtaining deposits from residents and transfers it on term bases. Global banking, on the other hand, recruits different bodies in the borrowing country for attracting potential local depositors and distribute the fund thereby. In the international banking deal, the funding system starts with a foreign saver and the deposit flows to the head office in the lending country. During transfer it is considered as an international loan and the currency exchanged is subject to value variations. Though this scenario is common in both aspects, it is more directly felt in international banking.

b) A strict choice between both international and global banking has to be exercised while allocating fund flow on debt basis to a foreign country. Feasibility of Japan’s financial structure to repay the debt must be the first concern while considering the scope of a viable transaction in the money lending. There are five ways in which a fund transfer on debt basis is possible from a USA based banker to a Japan borrower. In the first banking option, i.e., in International Banking, savers among residents of the USA are invited for their investment in the process as deposits which reach the Head Office in the country and the amount collected can be transferred as loan across the border. The borrower who receives the money directly essentially has to be Japanese in this regard.
On the other hand, savers’ deposit in various branches of the US owned banks travel in the similar way but when reaching the international banking process, the deposit must go to an American Banking franchise which allots the loan to the borrower. But the difference is felt when the bank regulates the fund according to the US norms. A USA banker can also receive deposit from the Japanese keeping a head office as the main frame and return the fund as loan to the borrower in another case of international banking. In this system, the functioning becomes easier between the two countries and cross border transaction is only subject to value exchange variables of the two currencies.
Download paper
Not exactly what you need?

Related Essays

The Economics of Money, Banking, and Financial Markets
Taking into consideration the impact of political, social and economic factors on the establishment and growth of foreign ventures, it is paramount for company directors to ensure coverage of wide areas during the risk analysis process. One of the benefits of risk analysis is that it provides directors with adequate knowhow on goods and services to offer as well as choices of location. In addition, it helps company owners with policies that are vital for operations of a company. Similarly, risk analysis helps companies to be compliant with laws in foreign countries. This report analyzes…
10 pages (2510 words)
International Finance and Banking
In 1965 the Northern Rock Building Society was formed as a consequence of union between the two North East building societies. The bank was nationalized in 2008. Concise summary of the facts of the case In the year 2007, the country of United Kingdom experienced the bank run for the first time in over 140 years. At that time the bank under consideration was not significantly large as it was ranked 7th taking the total assets in consideration. But the bank played a significant role in retail banking business. The bank also had its mark as a mortgage lender. About a decade ago, the bank…
3 pages (753 words)
Capital Markets and Investment Banking Process
The different types of capital instruments that constitute an investment portfolio have also been described. Lastly, recommendations have been provided regarding the selection of assets for the construction of an effective and efficient portfolio. Investment Banking Process for an IPO Initial Public Offering (IPO) refers to the process of issuing shares by a company to the public for the first time in its history. It is mainly done to raise capital or funds in the form of share capital to be utilized by the company in its business processes. An IPO process typically consists of three key…
5 pages (1255 words)
Economics of Money, Banking, and Financial Markets
We will look at the role and how banks channel this money from agents who want to deposit and agents who are in need of money and want to borrow. The role of the bank is very important because they channel funds towards financing investments that are productive. Introduction Financial institutions are very essential in accelerating developments. For developments to be achieved, people have to invest and for people to invest they must save. People therefore can only safe if there are places to save and can invest if there are financial institutions to lend them money to invest. Financial…
6 pages (1506 words)
It has been argued that, similarly to other industries in the non-banking sector, competition prevalent in the banking sector is desirable because it tends to generate a market that is more efficient, as well as the benefits that tag along like efficient resource allocation and better consumer prices. However, other theories argue more competition in the banking sector may precipitate an increase in instability with regards to the financial systems. Since greater competition in the banking sector leads to a decrease in margins of bank profits, banks are banks are encouraged to acquire riskier…
8 pages (2008 words)
Money, Banking, and Financial Markets
In this article, I will analyze the current money neutrality and the creation of reserve without money creation as per the central banking systems. Money neutrality Numerous economics students have been taught the theory of money neutrality and its effect on how people consider the issue of monetary policy. The implications of money neutrality may be summarized as follows: in the long run, the growth of money ought to be neutral in its impact on the production growth rate and ought to affect the inflation rate. The earliest canonical works on the neutrality of money stated the superiority of…
9 pages (2259 words)
Money, Banking, and Financial Markets
3). Around the world key indexes are on the rise, fuelled by the reduction in the benchmark interest rates by the Central Bank of China (The Globe and Mail Par. 4). The Eurozone has also announced it is acquiring assets in a move to bolster the economy of that region (The Globe and Mail Par. 4). The Canadian dollar is growing against other currencies, and there is an expectation that there will be an increase in Interest Rates by the Bank of Canada to reflect on the new levels of inflation.…
9 pages (2259 words)