The essay “Commercial and Investment Banking” will analyze various advantages as well as disadvantages of relationship lending. With alterations in the competitive circumstances surrounding an organization, the lending relationships alter as well…
Lending relationships, particularly those that are long-term associations make it simpler for small sized organizations to have access to outside funds. Owing to the risky nature of the small firms, it becomes very difficult for them to borrow funds if they lack lending relationships with banks. However, such kind of organizations predictably attempts to get access to further diversified sources of funds, after they have formed long-term lending associations with banks. Thus, it can be stated that the organization’s preceding lending association with a bank enables it to gain admission to the public securities market. Furthermore, the association of the organization with a bank persists to play a crucial role even when the organization is capable of issuing public securities. Nonetheless, when an organization diversifies its sources of funds, it has to face certain consequential drawbacks. The funding diversification restricts the bank’s readiness to assist the organization when it faces financial distress. This restriction in the bank’s flexibility is true even when the organization had taken up only diminutive values of public debt. In spite of everything, it can be conclusively stated that a good lending relationship with a bank augments the probability of fruitful negotiation when an organization encounters financial difficulties (Berlin, 1996). Answer 2 a) Kwan (2004) defines a large bank merger as the amalgamation of the operations of two banks, which are huge in size and the merger provides a large geographic scope to the subsequently merged institute. In the recent years, the large bank mergers have been an indication of the process for creating an extensive nationwide banking franchise. b) The regulatory modifications in the 1990’s have created immense opportunities for the banks to pursue the overseas economies. The banks have benefitted in terms of economies of scale as well as scope. Mergers have enabled the banks to provide the number of products and services and as a result, the unit price of production has reduced. Additionally, the expansion had created a circumstance where the shared expenses of providing two corresponding services are not more than the joint expenses of providing the two services separately. c) It is believed that mergers can increase the bank’s capability to diversify risk. Prior studies have implied that geographic spreading out would offer diversification advantages to a banking organization. This can be accomplished in the form decreased portfolio risk on the asset side, in addition to a decline in the funding risk on the liability side. Banks are likely to attain these benefits as it spreads funding actions over a wider geographic region. Furthermore, studies have also indicated that product extension could result in diversification benefits. The benefits would be more distinguished amid the banking as well as the securities activities, while it would be less prominent in the activities between banking and insurance (Kwan & Laderman, 1999). ...
Cite this document
(“Commercial and Investment Banking Essay Example | Topics and Well Written Essays - 2500 words”, n.d.)
Retrieved from https://studentshare.net/finance-accounting/7469-commercial-and-investment-banking
(Commercial and Investment Banking Essay Example | Topics and Well Written Essays - 2500 Words)
“Commercial and Investment Banking Essay Example | Topics and Well Written Essays - 2500 Words”, n.d. https://studentshare.net/finance-accounting/7469-commercial-and-investment-banking.
The services offered by the bank are reflective of the worldwide financial markets. UBS has set offices in all the prominent financial hubs. This includes United States, South America, Canada, Switzerland, Middle East, Europe, Africa and Asia. The customers can choose from a wide range of products of the company such as stocks, annuities, 401K plans, fund management, mutual funds, asset management, health & life insurance schemes and trust funds.
Economic development involves the improvement in the standards of living also referred to as economic wealth of a certain city, country or region to create a better habitat for its citizens. It involves the movement of the country's economy from a low-income economy to a modern day, high income economy, (Heyn, 1981).
An organization, typically a banking organization, which specializes in imparting such services, is termed as carrying on investment banking. While an entire entity may be devoted to investment banking, hallmarked by bulk banking, it is not unusual to observe investment banking arms within umbrella banking setup.
The two different branches of banking namely commercial banking and investment banking have different purposes and though both involve credit risk which is fundamental in their operations, the methods of assessing and managing them differ. Investment banking deals with raising of funds in the capital market by issuing and selling securities.
The focus is on the regulations of commercial banking and institutions and the different aspects of these regulations, their use and application within a social or governmental system. The questions raised would be whether regulations are necessary, if so why and what are the features of such regulations, how do they differ between countries and how do governments use these baking regulations for their own gains.
aracteristics of the financial services industry is the continuous development of its products/ services in order to meet the customer needs – under the influence of the increase of competition. Financial firms that operate in highly risky markets – referring not to the
The author gives recommendations to the UK banking sector. To register more growth and increase the customer base of high net worth individuals, it should open more branches across the UK, it should tighten its IT system to safeguards the funds of the customer seeking personalised services through private banking.
Barclays Bank is a multinational banking and financial services with operations in the retail, wholesale, investment banking, wealth management and mortgage lending and credit cards. It is a British company with the headquarters in London although it has branches and offices in all continents and major economies of the World.
The writer states that banking institutions are at risk of high initial capital investment especially where a huge amount is required to act as security for the customers’ deposits in case of liquidation. He proposes to monitor the operations of all subsidiaries and comply with regulation requirement of the host country when setting up subsidiaries.
1 Pages(250 words)Essay
GOT A TRICKY QUESTION? RECEIVE AN ANSWER FROM STUDENTS LIKE YOU!
Let us find you another Essay on topic Commercial and Investment Banking for FREE!