This stimulated my interest in analyzing the theoretical differences between a commercial bank and an investment bank. My research provided me a deep insight into the two different attitudes in Banking. Commercial Banks tend to be more conservative and consider current financial position of the borrower while making lending decisions whereas Investment banks tend to bet on the future of the firm as they view future cash flow trends as the true means of the financial strength of a firm. It is because of this reason that the firms in China tend to bank with investment banks because they want to take benefit of their future growth now.
The above facts provided me very different and alternative views about the theory working behind the banking as a field as I soon realized that by being conservative, as the theory may suggest, banks may not achieve their full potential and thus I embark upon to radically change my approach and methodology by shifting my analysis from the current cash flows to the future projection and growth of the cash flows. I did that however, by taking into considering, all the risk aspects involved in making lending decisions.
While analyzing one of clients, I found that the practice adapted by him was that he used to buy large variety of products from small Chinese firms and supply them to the Wal-Mart. This prompted me to think deep as funding to such client was lot more easy for us since Wal-Mart tend to benefit its customers therefore the cash flows of our firm seemed to be reliable and stable and secondly the suppliers of our client were small and mostly devoid of the traditional financing methods as banks traditionally avoid to lend to such clients. However, my analysis provided me an opportunity to go beyond theory and find a very unique blend of theory and practice where lending was to be done based on the basis of the supply chain.
This model, which is wholly developed by me, provided our bank a necessary chance to be as aggressive as an investment bank while remaining as traditional commercial bank catering the needs of different clients and providing services which matched with that of an investment bank as its supply chain finance model was not only unique but aggressive too.
Essay # 2
The competition is the name where big fish always eat smaller ones to fill their appetite to grow and dominate the market. Having that perspective in mind, and keeping China's unprecedented rise in economic power, our team started to develop financial products which attempted to take benefit of the rising value of RMB back in 2006.
This step was very wisely thought out because when China's central bank announced that RMB will be a free floating currency, our team at the Bank, realized that Chinese exporters specially would be affected badly by the association of RMB- USD Dollar Change in open market. Thus they would be needing products and services which could help them to hedge against such risks. Having belief in my predictions, I convinced the executives at my bank to form a team with the responsibility of developing prototypes of financial products, combining financial derivatives with international finance. Our team won many accolades from the executives and gurus as these prototypes were considered as technically most advanced products.
However, when actually