REFORMS OF BANKING SYSTEM

The Reforms of the Banking System



Executive Summary

The reforms in the banking system will make a significant positive impact on the whole banking industry, as it will become easy for the banking organizations to deal separately deal with the clearing and the investment functions of the banks due to which capital requirement of the banks will be fulfilled.

Recent trends in banking credit in some countries, banks and government bonds change the shifter loans to private companies instead. The banking systems in emerging countries have been transformed through privatization, consolidation and entry of foreign banks.

In development and management of risks, banks increasingly systematic methods for risk assessment and quantitative methods of risk management calls are lending less influenced by politics or a particular relationship with the borrowers of the bank.

Preventing systemic banking crisis involves loans national rates also appear sensitive to changes in money market rates in countries where banks to profit, perhaps due to restoring the health of the banking system.

The Reforms of the Banking System

Introduction

The study is related to the reforms in the banking system, these reforms are structured and took place due to various factors but most significant factor in these reforms of the banking system is the banking crises due to which the banking industry get affected. The reforms such as banks should be broken up into clearing banks and riskier investment banks. These changes in the banking structure will make a significant positive impact on the whole banking industry, as it will become easy for the banking organizations to deal separately deal with the clearing and the investment functions of the banks due to which capital requirement of the banks will be fulfilled.

Discussion

Recent trends in Banking Credit

After peaking in the second half of the decade of 1990, bank credit to the private sector has increased recently in a number of emerging markets, partly due to higher credit demand, with strong growth rates low interest and partly by offering more loans to improve banks' balance sheets. The share of bank lending to the sector, but is partly explained by lower capital costs of the Company reduced loan demand, and also because of the availability of funds on the stock and bond markets. In some countries, banks and government bonds change the shifter loans to private companies instead. Financial institutions increased lending to households, but what makes new forms of risk by the difficulties in the banking sector in Korea completed earlier this decade. One concern is that banks have in some countries a considerable share of the interest rate or currency exposure of households in the form of loans or floating rate loans in foreign currency. (Akerlof, 1970)

The Pace of Structural Change

The banking systems in emerging countries have been transformed through privatization, consolidation and entry of foreign banks. The Banks have improved the efficiency and performance, apparently in response to a more competitive environment. Recently, seem to reject the reforms made in part because of its ease and because the alternative ...