Advancement in the global regime has been of immense benefits because it has resulted in the establishment of international banking operation. International banking operation involves the banking procedure that operates in more than one national economy. Deregulation has occurred because the government has reduced its enactment of regulatory incentives to increase to operational strategy in these organizations. The development of technological advancement has also been identified as the crucial aspects that have resulted in the increase in development. These international banking are characterized by high risks like fluctuating interest rates, liquidity and foreign currency rates amongst others.
The occurrence of these measures has significantly reduced the operations of international banking. In view of the disparities experienced by the international banking, the international banking operations those are crucial in reducing the interference of the risks. The measures adopted include the directives from Basel committees and the observation of ethical practices that are geared towards enactment of increased activities. Stabilization and deregulation has also been adopted as the corrective measures for dealing with the risks.
Introduction
The periods of the recent past has been characterized by the rise in the attributes of innovation and technological developments. Development of the technology and the attributes of innovation have resulted in the establishment of development in the global regime. In the wake of these revaluations, the banking sectors have experienced tremendous changes thereby resulting in the development of international banking concept (Barth, Caprio and Levine, 2010). Analysis of the industry has revealed that the prevalence of traditional banking provisions were focused on the establishment of domestic baking practices. These banking practices were detrimental of the banking corporations because they were limited to the geographical confines of the regional boundaries. However, in the wake of the developments, the attributes of globalization has resulted in the establishment of rising concern regarding the operations of the banking sectors. The banks have expanded to the international boundaries and the practice of deregulation has also been witnessed. The leading banks in the global regime have adopted the aspect of overcoming the risks associated with expansion and development resulting form international banking so as to ensure they reap higher profits.
Literature review
In the wake of international expansion and international banking, the operations of the banks have witnessed the rise in the risks. These risks have the function of reducing the operations of the banks. Some of the risks associated with the banks include the liquidity requirements, fluctuation of the interest rates, credit and the market fluctuation and operational risks amongst others. The attribute of deregulation has also taken toll in the realm of exerting control in the expanding market (Dages, 2010). The ideology is denoted by the government concern to avoid interfering with the operations of the banks. According to International Monetary Fund (2011) the expansion of the international banking corporations has been characterized by limited government intervention thereby leading to the concept of reduced government activities.
However, the government has identified critical measure of controlling the operations of the banking sector without directly being involved with the management of the banks. The government is concerned with the drafting of polices that are aimed at protecting the citizens.
Over the period, the global regime has witnessed the rise in the financial sector development. Globalization has been adopted by these financial banks as the only to their survival in the market. Competition has risen and banks have devised measures of reaching out to the local customers. In this regard, the customers previously served by local banks now have an access of international banks. In order to overcome the attributes of competition, the international banks have adopted the practice of engaging in strategic banking practices (Ware, 2013). The elements of strategic baking involve the identification of the ideal needs of the customers. The recent development in technology has enabled the success of banking strategic management because it has enabled the baking sector to ascertain the specific needs and wants of the customers.
Upon identification of these market needs, the banks have joined the international market through mergers and acquisitions and also through expansion to capture the increasing demand for international banking. The records form the marker has shown that the periods of 2008 was characterized by increasing number of mergers and acquisitions because majority of the banks identified the necessity to expand to the global market (Panetta, F.et al. 2012). Despite the increase in the expansion, the banking sector has also witnessed the increase in the number of challenges and risks faced by the leading global financial institutions. The records from the market have stated the expansion of the global financial participant shave adopted the rise in the aspects of development and further witnessed the emergence of rising amount of risks. The increase in the number of risks is critical because it reduces the capacity of the operations of the banks and further leads to the reduction of the profit margin.
Some of the risks are cited above and they effects are detrimental for the international banks (Panetta, F.et al. (2011). In this regard, the international banks must identify the measures of cubing the increase in the industry.
The rise of disparities in the global banking systems has resulted in the development of measures to help in reducing the prevalence of risks that are experienced in international financial. In to combat the risks in international banking and the disparities that reduces the operation s international banking. On of the critical concern that has been observed by the leading global nations is the enactment of the regulations to ensure that the attributes of international banking. The enactments of these regulations have proven to be essential because of the aspect of deregulations (Panetta, F.et al. (2011). The sources have further confirmed that the government of the national economies has continued to observe deregulation policies to enable the international financial organization to operate at par.
The information from the International Monetary Fund, (2011) has stated that the enactment of deregulation policies has also been of critical contributions to the establishment of stable financial observation incentive. In the absence of the government regulations, the joint organization of the international financial operations. The aspect of modern technology development has significantly helped in the establishment of ideal operations of the financial operations. Modern technology has helped in the establishment of ideal communication and infrastructural network that has helped in the expansion of the banking sector. In the wake of these regulations, the consideration of the international banking sector has adopted regulatory policies to ensure that the international financial operations overcome the risks in the market. One of the leading measures that have been adopted by the international banking corporations is the enactment of Basel rules.
Managing the liquidity risk
Over the period, the aspect of liquidity has continued to be one of the detrimental factors affecting the operation of both local and international banks. Generally, the attribute of financial liquidity refers to the capacity in which security or an asset can be sold or bought with out interfering with the value of its price. Liquid assets held by the banking institutions are easily sold or bought and this is an aspect of ensuring that there is balance in the organization. In most cases, the aspect of liquidity is determined by the prevailing interest rates. The banks can hold their asset in liquid states or in the form of assets (Ahamed, 2012). Over the period, liquidity has continued to be a measure to be considered when enacting measures relating to the development of the operations of the international financial operations. The detrimental contributions of the aspect of liquidity have continued to affect the operations of the international banking organizations.
The introduction of the Basel agreements has helped in the rectification of these disparities. The development of the Basel agreement has been of immense help to the operations of the financial institution on the global perspective because it seeks to provide the dimensions that should be observed on international financial operations. The onsets of development of the Basel set of agreement provide the international financial participants with incentive to balance their liquid assets, and the securities (Allen and Moessner, 2010). Furthermore, the consideration of the leading critical financial factors has continued to derail the enactment of Basel agreements. Determination of the leading factors results in the establishment of increased performance. In order to control the international financial operations, the agreement has proposed the usage of liquidity coverage ration to help in the analysis and estimation of the international banking operations.
Interest rates regulation
The regulation of interest rates is extremely essential for the operations of international banking because it has critical attributes that contributes towards to the performance of the international banks. The establishment of stability of the prevailing interest rates in the market is extremely critical because it increases the conduction of market activities that further leads to the development of more profits for the organizations. Regulation of interest rates is essential because the elements of high interest rates become detrimental for the international banking corporations. The first consideration is higher interest rates.
High interest rates in the in the global market is detriment al because it reduces the capacities of international banking activities. High interest rates leads to the development of reduced intergovernmental spending and high amount of savings. Majority of the private and public organizations involved in the conduction of international banking sill experience reduction in their activities and this results in the reduction of the investment opportunities (Allen and Moessner, 2010). The continuation in the dormancy of the economy is critical because it enhances the establishment of high unemployment rates and in the reduction of the quality of money circulating in various global economies. This attribute is extremely detriment al for the operations of the international banking institutions because it reduces their activities significantly.
In view of the above detrimental consideration of the attributes of interest rates, the operations of the international banking institutions has resulted in the development of international banking regulations to ensure increased banking activities. Over the period, specific regulatory measures have been enacted by the banking regulatory authorities to ensure that banking privacy and secrecy is observed. It is a requirement for the domestic government to ensure that there absolutely low taxation incentives or not taxation at all for the establishment of the banking operations. The protection against deposits has also resulted in the establishment of critical regulatory incentives (Coombs, 2011). The considerations of enhancing regulatory measures should ensure that the aspect of banking regulation has critical amount of deposits that the banks should accommodate.
Finally, the operations of the international banks should ideally enhance protection against the political and financial fluctuations of the domestic economies. With the expansion of the global international banking firms in to the regional and domestic economies, the rubles and fluctuations in the global economies have the aspect of hindering the establishment of the international banks (Coombs, 2011). Therefore, it is extremely necessary for the domestic politics and financial stability to be differentiated from the factors leading increased operation of the international banks. In addition to this aspect of banking regulation has also been necessitated by the consideration of the policies enacted by Basel agreements. These Basel agreements have been adopted to enable ideal operations of the international financial organizations.
Industrial operational efficiency challenges
The recent period has witnessed the emergence of critical number of advancement in the global regime. In the wake of these developments, technological and infrastructural capacities have resulted in the adoption of new banking practices. Efficiency has been adopted as one of the critical aspects that enhance the leading challenge and the international banks must enact measures to help ensure that the international banks lives up to the expectations of the changing efficiency incentives. In the wake of the rising complexities, the banking institutions should consider the development of the factors that will enable them to address the cases of efficiency. The information from Basel Committee on Banking Supervision (2010) has highlighted that modernization has been identified by the banking organizations as one of the critical challenges in international banking because it has resulted in the development of technological infrastructure necessary revolutionizing the market. This capacity has called for the institutions to optimize their process and exercise control of their structures through the available tools.
In order to overcome the challenges, the international financial institutions have employed measures that have enabled them to adopt the latest bits of technology. The international banks have applied the usage of technology in the capacities of identifying the essential attributes of the market. IT systems have also been used to identify sourcing techniques that are of high benefits to the international organization and they enhance performance of the international banking corporation. In addition to the above factors, the international banks have been able to over the challenges by ensuring that they use technological findings to map the sourcing activities and in the reduction of the costs affecting the operations of business (Conolly, 2010). Certainly, the financial organizations have obtained excellence through the capacity of increasing the combination of technical experts and implementation of practical experience. Finally, environmental development has also resulted in the aspect of increased development because it has assisted in addressing the key financial challenges in the industry.
Operation risks in the industry
The banking industry is characterized by series of operational risks that can be associated with the volatility of the securities market and further with the fluctuation of the financial rates due to destabilized foreign currency exchange rates. The expansion of the global banking industry has been characterized by the prevalence of increasing factors of development and this has further enhanced the establishment of increased completion. The banking industry has witnessed the mergence of leading developmental attributes that concerns the realization of increased participation of the global institutions (Turner, 2010). In the wake of the rising disparities with regard to increasing operational risks, it is necessary for the global; banking organizations to identify the critical strategic management tools. Strategic management of the organization is ideal and further leads to the development of the success of international banking because it has the attribute of increasing the operations of the organization.
The establishment of strategic management is essential for the organization as it help in the development of goals and objectives of the organization (Coombs, 2011). In reality, the formation and operations of the international organizations is based on the establishment of the goals and objectives. The enactment of strategic measures in the banking sector has been adopted to ensure that the goals and objectives of the organization are realized. Over the period, the attributes of strategic management has implicated measures leading to the success of international banking, realization of customer goals and objectives and finally, the approximation of the ideal measures of fulfilling the needs of the customers.
Further aspects of management have resulted in the development of private banking practices and also the retail banks. The rise in international banking has resulted in the expansion and penetration of the international banks into the retail banking markets thereby enhancing into the rise of competition. Asset management has continued to be one of the leading challenges but the aspect of developing critical institutions in the market has helped in enhancing control of the rising factor market (Toniolo, 2011). The establishments of the institutions have helped in the enhancement of increased performance in the market thereby helping to make ideal environment in the market. Defining risk, governance and reporting
The operations of the local and regional banking industry are governed by the central banks that operate within the national economies. The central banks or the federal banks have the function of operating under the function of being the lender of the last resort. In this regard, the financial activities of the local banks activities are governed by the central banks. However, international banking sector has continued to experience the rise in the baking activities because competition has taken toll in the market thereby leading to the rise in the cases of disparities. Analysis conducted across the global market has shown that international banking operations are not characterized by federal bank regulations.
In this regard, the international banks must identify the leading consideration that helps in the regulations of their activities and the policies have been enacted to help in ensuring that international factors lead to the development of their developments (Toniolo, 2011). The leading contributions that govern the international banking institutions are the ethical standards. International banking is controlled by the reigning banking factors in the industry that enhances ideal development and participation and it results in the development of extreme conditions for the realization of increased market completion. Deregulation
Deregulation has also been identified as one of the disparities facing the establishment and operation of international banking because it influences the violation of human rights. Over the period, the governments of various nations have enacted measures to help them ensure self regulation occurs. The government has reduced its aspects of control in the operations of the international banks because the dominance of demand and supply has been adopted (Coombs, 2011). Even though deregulation has helped in the formation of the international banks, it has also reduced the capacities of the banks because it has resulted in the development of uncertainties. It is highly efficient for the banks to practice attributes of control and direction to the international in terms of interest rates and the capital plus on the matters of liquidity. However, the government of the hosting country should ensure that the interests if the consumers are closely observed in the economy. Conclusion
Finally, the precision of deregulation has been identified as the factor has helped the management of the banking institutions to define their management attributes. Therefore, deregulation has helped international banks increase their performance by ensuring that ethical standards are well maintained. On the other hand, the regulatory committees like the Basel committee have also contributed towards development and performance of the current status because they enhanced the following measures. The summary of the factors leading to the emergence of international banking and its operations can be highlighted as follows. 1. The implementation of the process to monitor the development of risks and their contributions to the profile fund and also the alienation with internal risk limitation system
2. Enhance communication with international monitoring authority about risk description and its management polices. This is done with aim of ensuring that the interest of the customers is observed at all times. 3. The regulatory committees should also ensure that they establish, implement and maintain an appropriate risk management polices without enhancing conflicts with the societal beliefs and cultures.
In summary, the recent development experienced in the global regime has continued to impact changes across the global divide. Some of the leading aspects of changes that have emerged duet o the consideration of these factors include deregulation and globalization. Furthermore, international banking has taken toll and has ensured increase in the output of the international banking. It has taken into account the fact that international banking is characterized by crisis that is solved through the elimination of the risks in the market. References Ahamed, L. (2012), Lords of Finance, Windmill Books, London Allen, W. and R. Moessner (2010), “Central bank co-operation and international liquidity in the financial crisis of 2008-9”, Bank for International Settlements Working Paper No. 310 Barth, J. R., Caprio, G. and Levine, R. (2010.), Rethinking Bank Regulation: till Anglels Govern, Cambridge University Press, New York Basel Committee on Banking Supervision (2010), The Joint Forum’s Report on Special Purpose Entities, September Coombs, C. (2011), the arena of international finance, New York, Wiley Conolly, F. (2010), “International short-term indebtedness”, memorandum (BIS), November, Bank of England Archive BE OV50/10 Dages, G., (2010), Practical Challenges in Strengthening Banking Supervision: Focus on Emerging Market”, Federal Reserve Bank of New York. International Monetary Fund (2011), „Are Credit Booms in Emerging Markets a Concern?“,IMF World Economic Outlook, April International Monetary Fund, (2011), „Lessons of the Financial Crisis for Future Regulation of Financial Institutions and Markets and for Liquidity Management” Panetta, F.et al. (2012), ‘An assessment of financial sector rescue programmers’, BIS paper No. 48. Panetta, F.et al. (2011), ‘An assessment of financial sector rescue programmes’, BIS paper No. 48. Toniolo, G. (2011), Central bank cooperation at the Bank for International Settlements, 1930- 1973, Cambridge University Press Turner, P. (2010), "Central Banks, Liquidity and the Banking Crisis", in Time for a Visible Hand- Lessons from the 2008 World Financial Crisis, edited by Stephany Griffith-Jones, Jose Antonio Ocampo and Joseph Stiglitz, Oxford University Press Tallman, E. and E. Wicker (2010), ‘Banking and Financial Crises in United States History: What Guidance Can History Offer Policymakers?’, Federal Reserve Bank of Cleveland Working Paper 10-09. Ware, D., (2013), Basic Principle of Banking Supervision, Handbooks in Central Banking, no. 7, Bank of England Warburton, C. (2011), ‘Monetary Difficulties and the Structure of the Monetary System’, Journal of Finance, vol VII no 4, December.
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