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 attempt 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 organizations 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 more number of products and services and as a result the unit price of production has reduces. 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 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).Consequently, a larger bank is anticipated to be less susceptible to economic instabilities. Hence large bank mergers could lessen the cost of capital for the banks, further augmenting the advantages related to economies of scope and scales that can be accomplished only from the production procedure. d) The large bank merg
Commercial and Investment Banking Table of Contents Answer 1 3 Answer 2 4 Answer 3 6 Answer 4 7 Answer 5 7 Answer 6 9 Answer 7 10 Answer 8 11 References 12 Answer 1 There are various advantages as well as disadvantages of relationship lending. It should also be noted that with alterations in the competitive circumstances surrounding an organization, the lending relationships alter as well…
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.
The significance count on the consideration that a big percentage of the world’s population are Muslims and Islam is the third largest religion. 3. Dissertation Plan: In the introduction, I am going to write 1000 words in which I am going to define my terms and points that I am going to make in the essay in a logical and linked fashion.
It also assesses and supervises financial organizations for security and reliability. It also embarks on consumer-protection roles, and administers financial institutions in receivership. Insured institutions are required to put indicators at their business premises declaring that their deposits are supported by the full trust and credit of the U.S.
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.
Money laundering is defined as a process which a criminal engages in a series of financial transactions that attempt to hide the origin and ownership of property obtained by illegal acts in an attempt to
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.
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