Introduction
It is interesting to observe the operations of commercial banks with special emphasis on the ways and means that are put in place to deal with risks that may arise. In this chapter, the researcher will take a look at the kind of regulatory environment that has been internationally proposed for banks and the kind of changes that have happened over time. The researcher will start by addressing the reasons that attributed the international banking body to decide to make regulatory standards for all banks. Under the same section, the researcher will deal with an overview of the three standards that have been proposed over time. The first will be the be the Basel I then followed by Basel II and lastly the researcher will focus on Basel III and the underlying challenges, if any, that need to be addressed in future proposals that will be a base for this researcher’s proposal for a new rating system specifically designed to address issues in Lebanon banks. This researcher believes that the internationally set rating system does not allow better ratings for banks in regions that have political instability even if the banks have the capability of performing better than in other regions that have political stability.
In part two of this research, there will be focus on credit rating and models including the rating systems, and the private rating agencies and the models that they use in their gradation. There will also be focus on the private rating agencies and their adoption of the Basel recommendations and requirements in rating of commercial banks. This is the same part that the researcher will look at the origin of rating of commercial banks in Middle East and Lebanon in particular. The reasons leading to low gradation of...
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The financial crisis of 2007–2008 is considered by many economists the worst financial crisis since the Great Depression of the 1930s. This crisis resulted in the threat of total collapse of large financial institutions, the bailout of banks by national governments, and downturns in stock markets around the world. The crisis led to a series of events including: the 2008–2012 global recessions and the European sovereign-debt crisis. The reasons of this financial crisis are argued by economists. The performance of the Federal Reserve becomes a focal point in this argument.
The banking system in Panama makes use of the advanced modern technologies. In Panama City, there are approximately 100 internationally renowned banks. The presence of strict regulations regarding the banking sector by the government has seen the banking sector grow tremendously (Arboleda & Martín 152). For instance, the Panamanian government has come up with strict banking rules and guidelines, to scrutinize all the banking practices so that the banks can give good banking services to all people. To ensure this occurs, the government has ordered the submission of monthly auditing reports from all the banks to the National bank of Panama and to the Panama’s National Banking Commission. All the depositors in any bank need sureties of their securities,
Cabral, R. (2013). A perspective on the symptoms and causes of the financial crisis. Journal of Banking & Finance, 37, 103-117
Although the article claims that Basel III will likely promote negative effects, such as an increase on the cost of credit to borrowers, it fails to acknowledge the potential benefits of that agreement. In fact, many substantial benefits are associated with Basel III, particularly those relating to increased b...
John Summa, Ph.D. 'From Booms To Bailouts: The Banking Crisis Of The 1980s'. .Investopedia US, A Division of IAC. October 31, 2009. Web. 18 March 2014. (http://www.investopedia.com/articles/financial-theory/banking-crisis-1980s.asp)
Moody's Analytics, 2011. An Introduction to TTC Public Firm EDF Credit Measures, s.l.: Moody's .
The "subprime crises" was one of the most significant financial events since the Great Depression and definitely left a mark upon the country as we remain upon a steady path towards recovering fully. The financial crisis of 2008, became a defining moment within the infrastructure of the US financial system and its need for restructuring. One of the main moments that alerted the global economy of our declining state was the bankruptcy of Lehman Brothers on Sunday, September 14, 2008 and after this the economy began spreading as companies and individuals were struggling to find a way around this crisis. (Murphy, 2008) The US banking sector was first hit with a crisis amongst liquidity and declining world stock markets as well. The subprime mortgage crisis was characterized by a decrease within the housing market due to excessive individuals and corporate debt along with risky lending and borrowing practices. Over time, the market apparently began displaying more weaknesses as the global financial system was being affected. With this being said, this brings into question about who is actually to assume blame for this financial fiasco. It is extremely hard to just assign blame to one individual party as there were many different factors at work here. This paper will analyze how the stakeholders created a financial disaster and did nothing to prevent it as the credit rating agencies created an amount of turmoil due to their unethical decisions and costly mistakes.
Encouragingly Jordan’s banking sector managed to weather the crisis better than other sector of the economy, and other banking sector in different countries. This was mainly supported by rather conservative policies and tight regulations. For instance banks in this country are pure universal. This implies there is no pure investment bank that relies entirely on investment income, a factor that majo...
Although it can be argued that the longer term benefits of stability are more important than the short term costs of reform we have reached a point where the cumulative impact of regulatory changes is becoming a hindrance to banks being able to effectively do business. The increasing cost of compliance required by ever-expanding regulation is strangling the sector and impeding economic growth without resulting in a real reduction of systemic risk.
On the one hand, the Basel Accords have contributed greatly to the stability of the international banking system, with remarkable results. On the other hand, unfortunately, though predictably, they have also given different actors in the financing market the incentive and means to evade regulations. These behaviors have led to a new set of financial risks in the markets.
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Profitability is high and diversified. Asset quality is good and NPLs are low and well provisioned. Financial soundness indicators for the three main domestic banks remained strong even during the global and European crises. Stress tests suggest that banks are resilient against numerous unfavourable macroeconomic scenarios as their high capitalization can offset potential losses.
A variety of groups are concerned in bank profitability for various reasons. The bank shareholders would want to know if the value of their investments is high or low. The investors also use current and past performance to predict future price of the banks’ shares traded on the stock exchanged. The management of the bank as trustee of the shareholders is evaluated and compensated on the basis of how well their decisions and planning have contributed to growth in assets and profits of their banks. Employees of bank also are concerned with profits, since their salaries and promotions are frequently tied to the profitability performance of their banks. Depositors use bank performance and profitability as indicators of security for their deposits in the banks. Finally, business community and general public are concerned about their banks’ performance to the extent that their economic prosperity is linked to the success or failure of their banks.