International banking is now a days becoming backbone of any economy. It plays a vital role in the development of financial system of country. International banking activities has been grown-up speedily due to increased international trade flows and foreign direct investment activities, the globalization of capital markets, and the liberalization of domestic financial markets since 1960s. International banking activities may involve cross-border activities and activities of banks outside their home country (i.e. foreign banks). Banking has gradually become more globalized, which leads towards advances in communications and technology, economic integration. Especially, foreign bank entry has increased sharply in the last few decades, which helped different nations in the development of their financial system. Foreign banks also helped the economies in financial crisis to deal with it and also helped in the establishment and restructuring of their financial system after that crisis.
Many studies have taken out on this issue, i.e. on foreign banking on different developed and under-developed nations and transition economies as well. The competitive advantage of the foreign banks was first investigated by Goldberg (1992). Following this original study, many studies including Meinster and Elyasiani (1988), Mahajan et al. (1996), DeYoung and Nolle (1996), Elyasiani and Mehdian (1995), Jagtiani and Khanthavit (1996) have been taken and gave deeper and meaningful analysis. All of these studies had uses formal econometric analysis based on a precise theoretical background of microeconomics. These studies concluded that cost structure and performances differ between domestic and foreign banks as they are different in management strategies,...
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...e the efficiency of domestic banks by encouraging domestic banks to cut cost and perform better than earlier. In the presence of foreign banks, domestic banks are forced to improve the quality of their services so as to hold their existing market shares and customers as well. This may improve the quality of existing financial services of domestic banks and their profits as well. So we can say that foreign bank presence directs to positive spill-over effects.
The results of their study show that foreign bank presence and domestic banks’ performance are positively related. Hermes and lensink further argued that foreign bank presence is associated with higher costs and margins of domestic banks at lower levels of financial development, while foreign bank presence is associated with falling costs and margins of domestic banks at higher levels of financial development.
After World War II, many nations were left with weak economy and financial instability. Offshore banking became a method to escape national regulation as many national regulators turned a blind eye on deposits in currencies other than their own. The offshore market became popular due to its ability to facilitate new finance innovations and keeping transaction costs low. Eurodollar market for example is a product of this trend. As offshore banking became competitive, the U.S. had to remove limits on national banking and the division between commercial and investment banking. Canada also benefitted from this new trend as it appeared to be very promising for international expansion. However, differing from the United States, Canadian Banking Act was in place to protect domestic banks from new foreign entrants and also effectively manage risk. With the increase of international investment, not only does funding needs were satisfied but new business information systems were also developed due to the increased need for more centralization and a variety of services. New regulations such as The International Banking Act of 1978 was formed to level the playing field between foreign and American banks by requiring mutuality from any country whose banks are seeking permission to enter the United States. The Gramm-Leach-Bliley Act also removed barrier for commercial banks, investment banks,
These factors have a positive impact on the company’s profitability and they facilitate the lowering of costs of operation. For instance, HR policies that are used in the business improve the efficiency in operations (Lessambo 27). This attracts a high number of customers and this increase the bank’s profitability. On the other hand, the size and coverage of the bank is worldwide and this leads to the growth in the customer base and
American Express is a world wide travel related service company. American Express works with both consumers and business with their financial planning as well as offers numerous amounts of credit card products and travel assistance. They have many products and services that are used throughout the world by consumers and businesses. As American Express moves towards the future, like most credit card companies, they want to be competitive and responsive to the needs of the consumer.
This chapter covers the overview of the country in a short history, banking system, commercial banks and interest rate theory. The chapter provides also the theoretical review of interest rate and profitability.
Empirical studies of banking efficiency (see for example Karimzadeh, 2012) often measure each of these three types of efficiency. However, some scholars (see for example Sufian, 2011) have measured technical efficiency alone. Following Sufian’s methodological example, only the technical efficiency of private banks in Northern Cyprus will be measured in the current study.
The banking industry has come under increasing pessimism of late because of rising short and long-term interest rates. The banking industry's market capitalization made a substantial decline. Most investors are concerned with whether the industry can sustain continued profitability as a result of these factors.
In the integration of Indian financial market with international markets, the Reserve Bank of India to market development has been that of cautious and informed by the experience of other developed and developing countries. Even within the constraints imposed by this approach, the Reserve Bank and the India Government have taken steps that include progressive liberalization of capital flows, calibrated increase in investment limits for Foreign Institutional Investors in government and corporate debt, introduction of Qualified Foreign Investor as a separate investor class, expansion of the menu of risk management instruments,
In this chapter, the data collected were systemically processed, tabulated and made suitable for analysis and interpretations. It was a study on stock price movement in selected banking companies through data collected for the nine months from July to March. The performance is analyzed for the stock prices of Current market price, Yearly high, Yearly low, Last completed financial year value, Sales, Operating profit margin, Net profit, Equity, Earning per share, Book value, Factor value, Dividend and Price Earnings. The results obtained were classified, tabulated and the following analyses were performed in fulfilling the objectives of the study.
Prasad, Eswar S., et al. “Effects of Financial Globalization on Developing Countries: Some Empirical Evidence.” The National Bureau of Economic Research. National Bureau of Economic Research, 2003. Web. 10 Dec. 2013. .
A Report on NatWest Bank and an Analysis of the Banking Industry 1. Introduction This report focuses on NatWest and the industry in which it operates. The purpose of the report is to give a concise but accurate view of how NatWest operates as an organisation and the links between its environment, in this case the banking industry. Company History =
It is of noteworthy that bank managers should understand the key factors that affect bank profitability and these factors could be internal and external determinants. The internal determinants originate from bank accounts (balance sheets and/or profit and loss accounts) and therefore could be termed micro or bank-specific determinants of profitability while the external determinants are variables that are not related to bank management but reflect the economic and legal environment that affects the operation and performance of financial institutions (Athanasoglou, Brissimis, & Delis,
While banking and financial institutions have play an important role in contributing the economic growth by collecting and allocating the resources to those who in need of finance, it also can bring the financial chaos to the economy as well. Since this industry is a sentitive and fragile one, the banking superivision is required to monitor on the banking system aiming to identify and measure risks in order to protect not only the financial institutions but also the customers from the contagious risk that would happen without any alert. Moreover, banking supervision is established in order to protect depositors against avoidable losses, thereby contributing to confidence in the financial system and the
It is a known fact that the banking industry plays a huge role in today’s society, the industry has grown rapidly of many decades and still growing. The banking sector is that sector of the society that is actually responsible for the handling of financial assets for other sector of the economy, they do this by investing the financial assets in order to create more wealth in the society while regulating all the activities involved in the process. (What is the banking Sector 2015)
middle of paper ... ... inga (1999) and Pasiouras and Kosmidou (2007). The above estimation has left some questions pertaining to fill the gap by attempting to identify and measure factors that determine the profitability performance of commercial banks in Malaysia. What are bank-specific determinants and macroeconomic determinants influence on banks’ profitability in Malaysia compare to other countries?
This is followed in section 5 by an analysis of the recent changes in the banking industry. With the development of the financial system, declining entry barriers and the deregulation of the banking industry make banks no longer the monopoly suppliers of banking services and reduce their comparative advantages which they usually hold in the past. Whether the reasons give rise to the existence of banks are still powerful will be examined here, while section 6 offers a way of considering whether banks are declining by looking at the value added by the banks. When the value added by banks is examined, banks are not a financial intermediation, which not only conduct the traditional services but also provide more diversified