Categories
Banking

Qatar’s Banking System

1. 0 Subject Area Strategic Management 2. 0 Project Proposal The paper will be an investigation of the major challenges that face Qatar’s banking sector. These problems will be analyzed and their possible solutions identified using strategic management theoretical framework. 3. 1 Background of Qatar’s Banking Sector Qatar’s banking sector has had great growth compared to that or the general Middle East region. Its stability guarded it form the global financial crisis that recently occurred. This is because of the close financial tiers that Qatar has with the Gulf region.
However, the aftershocks of this phenomenon affected it to some extent (Kamrava, 2009, p. 411). Generally, Qatar’s banking sector was the most impressive Gulf Cooperation Council markets since the last quarter of the year 2008. Issues of declining customer confidence, liquidity and a coerced reluctance to lend have been the major challenges facing this sector (Qatar Development Bank, 2008, p. 12). Lending restrictions by the Qatar Central Bank, such as a loan-to-deposit ratio of 90 percent, contributes to deepening of these challenges.
Islamic banking has been continuing to grow in this region in expense of the conventional banks which now view sharia-compliance as vital move to maintain their profitability. The government and Qatar Investment Authority have been trying to mitigate these problems to improve the overall performance (Qatar National Bank, 2009, p. 67). 3. 2 Aims of the study To identify and analyze the major challenges facing the banking sector of Qatar To determine the possible solutions to this problems using strategic management 3. Motivation for this subject area choice This topic is important for my future career prospects since I intend to invest in Qatar emerging market. I highly believe that the Qatar’s economy has unexploited potential in its banking sector. If exploited, this sector is capable of sending positive external benefits to the general economy increasing the viability of my investment prospects, due to financial availability amongst other efficiencies. 4. 0 Research Question 5. 3 What are the major challenges facing the banking sector of Qatar? . 4 Are these problems from within Qatar’s economy or from the regional / global economy? 5. 5 What are the possible solutions to this problems using strategic management? 5. 6 What are the impacts of solutions proposed to Qatar’s economy at large? 5. 0 Title Addressing challenges facing the banking sector in Qatar through strategic management 6. 0 Methodology The methodology employed for this paper will be both empirical and analytical in nature. In the analytical part, existing literature will be thoroughly scrutinized.

After this, a comprehensive list of challenges of Qatar’s banking sector and their possible solutions will be compiled. The empirical part will involve collection of statistical data relating to the banking sector. This information will then be analyzed by use of various statistical techniques. Type of data employed will include literature from other scholars, official statistics, industrial data and company data. This will be gathered from credible sources including libraries, databases, official guides, publications, and companies’ annual reports. . 0 Data collection methods They will include compilation of statistics, desk research, interviews, survey questionnaires and literature case studies. Secondary data will be highly employed since it is easily available and more detailed. Reference Kamrava, M. (2009), “Royal Factionalism and Political Liberalization in Qatar”, The Middle East Journal, Vol. 63, No. 3 pp. 401-420, Print. Qatar Development Bank, (2008), Annual Report, Print. Qatar National Bank, (2009, May), Qatar Economic Review, Print.

Categories
Banking

Fractional reserve banking dissertation

Chapter 1
1.1 Introduction
Fractional reserve banking concepts, theories and a real life case of debate by the Bank of England Governor Mervyn King have been investigated in this dissertation from a perspective differed to the mainstream. There have been controversy on the discussion on the nature and uprising of fractional reserve banking. Therefore, the author believes a need for awareness on the history and nature on subject is worth identifying. The approach mentioned above is expected to form a new angle on the issue investigated and conducting further insight for a more dynamic instead of a static framework in forthcoming research.

Based on extensive reviews on texts, books, research papers and websites. Appropriately, from the literature review, the author would consider fractional reserve banking as a widely spread banking system in which allows banks to create money in a banking system by lending a fraction of its deposits while keeping only a small fraction of the original deposit as a reserve available for withdrawal and daily operations. This kind of de facto banking operation system has been legit and practiced by all commercial banks.
Accordingly, a vase amount of publications have been stating the goldsmiths were the inventors of this banking mechanism. In this dissertation, the author would be looking into the background of a brief history of fractional reserve banking in the 17th century, as this operation has been operating throughout the globe in every commercial banks for decades. In addition, a critical review Fractional Reserve Banking as a system as a whole and its affects on our modern day society. And by explaining some common misconception on fractional reserve banking and full reserve banking. In addition, evaluating a case of speech by the Bank of England Governor Mervyn King and the Bank of England’s view on this banking system and concluding with some perspective on future development and reformation on the current fractional reserve baking system.
1.2 Research Aim
The aim of this research is to investigate, identify and indicate the existing critical factors and problems behind the fractional reserve banking system in the UK by going through a critical literature review and a case on the Bank of England’s Governor Mervyn Kings’ speech on the subject and identifying possible reform suggestions. In order too achieve the research aims, the following objectives below have been set.
1.3 Research Objectives
This research approach is expected to investigated and identify the background history, insolvency and possible reform suggestions in the current fractional banking system in the UK. It will mainly focus on critical analysis and literature review and case study on fractional reserve banking, full reserve banking, critiques on fractional reserve banking and possible reform suggestions from a financial and ethical perspective. In order too fulfill research approach, the research objectives have been created and summarized as follows:
Firstly, identify the concept and background of fractional reserve banking, capital reserve ratios, full reserve banking and reform proposals by reviewing literatures.
Secondly, find out the history and possible up rising of fractional reserve banking.
Thirdly, distinguish misconceptions and critical analysis on fractional reserve banking.
Fourthly, explore and recognize key factors and problems above the theories by critical analysis on the selected case study.
Fifthly, perceive possible reform suggestions to the current fractional reserve banking system.
1.4 Research Method
In order to achieve a high standard quality of result, it would be important to identify the research method and methodology. General business research stages will be followed in the research process. The general business research stages includes defining the objective, planning a research design, planning a sample, collecting data, analyzing the data, framing a conclusion and lastly, preparing the report (Zikmund,2003)
The main research method in this research approach would be literature review. In order to maintain a high quality and thorough systemic research; gathering supportive information, theories and frameworks includes published researches, academic journals, case studies, academic publications is necessary.
1.5 Dissertation Structure
Chapter one is an introduction briefly introducing some background information, research aim, and objectives for this research approach.
Chapter two largely focus on the relevant literature reviews to the research project which consists of history on fractional reserve banking, definition and concepts and misconceptions on the subject. The literature review is to identify supportive and relevant information to the research area and focus.
Chapter three will be providing an overview on the methodology and research method selection, supportive software used for extensive comparative analysis and the chapter will also be identifying data formulation.
Chapter four will be revealing the research result, findings and case analysis, which is supportive, and relevance to the further discussion.
Chapter five will be concluding the research paper with suggestions for reform and points out critical factors uncovered in this research approach, and future improvement.
1.6 Limitation
Because of exceptionally limited time in the whole research process, the result and quality of the research paper is therefore in constriction. On the other hand, a lack of up to date literatures and researches in terms of critiques on fractional reserve banking has inevitably increased the difficulty in acquiring expressive and reliable data in the systemic approach. As stated above, therefore the author would have a level of difficulties in obtaining the perfect research result.
Chapter 3 Methodology
3.1 Data Sources
The research frameworks are well organized and carried out accurately in order to achieve a research result as precise as possible.
First of all, to understand the importance of the research methodology, the research process will be identified and explained. In this case, relevant literature review from all possible sources and formats from books, journal articles, thesis and the internet will be included as the primary source of data. The secondary, research data format would be using a case study as its function is to verify arguments from other sources and helps drawing views and debates on the nature of the subject.
3.2 Methodology Approach
3.2.1 Data Samples
The method adopted for this research project involved extended on-site visits to Thomson One Banker and Emerald Journals. In addition to it, SSRN research database Accordingly, Thomson One Banker represents the most important data source. A relevant case from the data sources was carefully selected to achieve a better understanding of the factors and critiques on fractional reserve banking. The author also implemented additional press research to verify the data in the Financial Times and The Economist.
3.3 Selection of Research Methodology
In this research paper, the author tends to apply case study approach and sources of data from literatures. Which emphasize on observing and reasoning as a result of understanding the nature of the phenomena in terms of expressing the observation the author’s point of view. The case study method is also known as the realistic analysis that studies a current phenomenon within its present-day and real life perspective involving various sources of data (Yin, 2003). Anderson (1998) added that the case study approach is about the exploration of contextual realities and dissimilarities between what was planned and what have actually occurred in terms of who, why and how things happen. As well, Edge and Coleman (1986) mentioned that the case studies enable researchers to gain high degree of confidence in their judgment and verdict, which as well improve the degree of humility.
The case study approach is a common use of technique of corresponding to what, who, when and how things happen. Therefore, the case study approach is chosen in order to assist the author to deliver a conclusive debate. From a several source of supportive evidence, literature review and case study enables the author to look deeply into real life happenings. Furthermore, An explanatory case study offers the data and perception based on cause-effect relationships, responding to whom, why and how things happen in its natural context that includes the point of view of the participants (Kos, 1991). And throughout the methodology progress, it has been a great media of increasing the existing understanding of the processes by businesses and other organizations implemented, this is because it is a way of creating consistent and yet valid evidence.
3.4 Limitations
Arising from the extensive case studies and literature reviews, the research methods can hardly be factually completed due to the limitations of the research approaches. There are at least three obstacles in obtaining unbiased references from the methods chosen.
Potential inadequacies in this research include the large amount of data, which may have led to missing important data or overweighting some findings due to focusing on a particular and big set of data. Besides, it is possible that revisiting the data would reveal other issues and aspects would occur. Moreover, a research study generally is limited to descriptions of what the author gathered from the case study and literature reviews analyzed, which also limits the ability to generalize the results.
On the other hand, the research study is time-consuming to gather and even so it takes lots of time to analyze as cutting corners on either of these aspects can probably cause to lower the value and credibility of the research paper. As a result, the author might or might not give valuable data in the time given. Besides, the author faces the challenges in representing of the information gathered. Every researcher has different ways of presenting the same set of data based on different styles and emphasis which leads the author to have difficulties in summarizing the data collected.
Shionoya (1992) defines that methodology is known as the philosophical study of reason behind a prescribed use of methods. Consequently, studies of various definitions, concepts and theories are preferred to verify the functions and importance of methodology. This study correspondingly indicated the purpose for applying different methods and clarified the motive of a specific method which in terms of aiding in framing the particular discussion. Consistently, this theory is considered as predictable and recognizable.
As quoted from Easterby-Smith et al (1993), the discipline which investigates and evaluates methods of inquiry, of validation, of teaching etc., a theory within that discipline. It is important to pay attention that methodology is about method and not the same as method (Easterby-Smith et al, 1993). Accordingly, as there are different emphasis within methodology and method, this theory has distinguished the point on investigation and evaluation which has illustrated the methodology and method noticeably. However, in terms of the distinctive yet complex methodology, as the theories gathered and examined is the result the research in which that the real functions might influence the research, therefore, there are still many components to be considered within the research process.
In fact, there are array of research methods available is widespread. Khairul (2008) mentioned that the choice of which method to employ is dependent upon the nature of the research problem. However, the actual suitability of a research method comes from the nature of the social phenomena should be explored (Morgan and Smircich, 1980). In substance, Remenyi and Williams (1993) presents as many as 20 types of qualitative methods and Creswell (1994) proposes basic methodological traditions of research namely ethnography, grounded theory, case study and positivism and post-positivism for phenomenological studies. In addition, Quinn-Patton (1987) offers various methods for consideration.
Methodology unquestionably can be used as a decision-making procedure, which is carried out for guidelines of one or more analysis or suppositions. Khairul (2008) stated that a paradigm is a hypothetical design that likely to classifies the researcher’s reality yet one may not be aware of it. Consequently, there is a connection of theoretical decision making to strategies of collecting different backgrounds and different types of figures. Furthermore, the choice of which appropriate method to employ is important in terms of those available background information and figures.
Under the circumstances, it is clear that every type of methodologies and methods has explicit and implicit research design. Accordingly, methodologies and methods shape the research process in terms of questions asked and answers received, as well it privileges specific ways of knowledge. In the main, paradigm and perspectives are taken adequate account in the framework of the research. Thus, research methodology is the way showing researchers conduct their researches.
A paradigm is defined as a worldview representing people’s value judgments, norms, standards, frames of reference, perspectives, ideologies, myths, theories, and so forth, in terms of managing their thinking and actions (Gummesson, 1991). As cited from Leedy (1997), there are mainly two basic methodological traditions of research derives from the nature of reality, known as positivism and post positivism namely phenomenological. In order to maintain the analysis of the phenomena, sufficient information and precise elements might be required in positivist paradigm.
Conversely, the use of several sources of information can help extensively in improving the validity and reliability of the research. By studying every aspect of the problem from as many angles as possible, and by using different sources of data, the case study research strategy is a powerful research tool in the hands of a capable researcher (Hodkinsons, 2001). It is believed that bias is everywhere but it can be minimized with following the steps as mentioned above. The author understands that it is the crucial task in the research paper to reduce the bias level.
Reference
Admati, A.R., DeMarzo, P.M., Hellwig, M.F., and Pfleiderer, P (2010), ‘Fallacies, Irrelevant Facts, and Myths in the Discussion of Capital regulation: Why Bank Equity is Not Expensive’ Stanford Business School, mimeo.
Arrow, K.J. (1951), ‘An extension of the basic theorems of classical welfare economics’, In Proceedings of the Second Berkeley Symposium on Mathematical Statistics and Probability, ed. J. Neyman, Berkeley: University of California Press, 507–32.
Arrow, K.J. and Debreu, G. (1954) ‘Existence of an equilibrium for a competitive economy’,
Econometrica 22, 265–90.
Bagehot, W. (1873), ‘Lombard Street: A Description of the Money Market’, Wiley & Sons, (reprinted 1999).
Bank of England, (2009), ‘Financial Stability Report’, June 2009, available at http://www.bankofengland.co.uk/publications/fsr/2009/fsrfull0906.pdf
Diamond, D.W. and Dybvig, P. H. (1983, 91(3)), ‘Bank Runs, Deposit Insurance, and Liquidity’,
The Journal of Political Economy, pp. 401-19.
Brennan, S., Haldane, A. and Madouros, V. (2010), ‘The Contribution of the Financial Sector
Miracle or Mirage?’, available at http://www.bankofengland.co.uk/publications/speeches/2010/speech442.pdf
Colangelo, A. and Inklaar, R. (2010), ‘Banking Sector Output Measurement in the Euro Area – A Modified Approach’, ECB Working Paper Series No. 1204.
Debreu, G. (1951), ‘The coefficient of resource utilization’, Econometrica 19, 273–92. Fisher, I (1936), ‘100% Money’, Revised edition, New York: Adelphi Company, 1936.
Friedman, M. (1960), ‘A Program for Monetary Stability’ New York: Fordham University Press,
1960.
Haldane, A. (2010), ‘The $100 Billion Question’, available at
http://www.bankofengland.co.uk/publications/speeches/2010/speech433.pdf
Hellwig, M. (1995), ‘Systemic Aspects of Risk Management in Banking and Finance’, Swiss
Journal of Economics and Statistics, Vol. 131 (4/2), 723-737. IMF (2009), ‘Global Financial Stability Report’, April 2009.
Institute of International Finance (2010), ‘Interim Report on the Cumulative Impact on the Global Economy of Proposed Changes in the Banking Regulatory Framework’, available at http://www.ebf-fbe.eu/uploads/10-Interim%20NCI_June2010_Web.pdf
Kay, J. (2008), ‘We let down diligent folk at the Halifax’, Financial Times, 24 September 2008
Kay, J. (2009), ‘Narrow Banking: The reform of banking regulation’, CSFI report. Keynes, J.M. (1936), ‘The general theory of employment, interest and money’, London:
MacMillan (reprinted 2007).
Kotlikoff, L.J. (2010), ‘Jimmy Stewart is Dead: Ending the World’s Ongoing Financial Plague with Limited Purpose Banking’, John Wiley & Sons.
Lacker, J.M. (2010), ‘Real Regulatory Reform’, available at http://www.richmondfed.org/press_room/speeches/president_jeff_lacker/2010/lacker_speech_201
00301.cfm
Miles, D. (2010), ‘Leverage and Monetary Policy’, available at
http://www.bankofengland.co.uk/publications/speeches/2010/speech451.pdf
Modigliani, F. and Miller, M.H. (1958), ‘The cost of capital, corporate finance and the theory of
investment’, American Economic Review 48, 261–97.
Pigou, A.C. (1920) ‘The Economics of Welfare’, 4th edition, London: Macmillan, 1932.
Tobin, J (1987), ‘The Case for Preserving Regulatory Distinctions’, in Restructuring the Financial
System, Federal Reserve Bank of Kansas City, 1987, pp. 167-183
Tucker, P. (2010a), ‘Resolution of Large and Complex Financial Institutions: The Big Issues’
available at http://www.bankofengland.co.uk/publications/speeches/2010/speech431.pdf
Tucker, P. (2010b), ‘Shadow Banking, Financing Markets and Financial Stability’ available at
http://www.bankofengland.co.uk/publications/speeches/2010/speech420.pdf
Weitzman, M. L. (1974), ‘Prices vs. Quantities’, Review of Economic Studies, vol. 41, p.477-91.
Wolf, M. (2010), ‘The challenge of halting the financial doomsday machine’, Financial Times, 20
April 2010.

Categories
Banking

Banking Cord Blood

Cord blood is the stem cell-rich blood in the umbilical cord after it has been immediately removed from the baby(What is Cord…). Cord bloods are usually stored through Cord Blood Banks and it is collected and processed through different techniques like through AXP, Hep, and Sepac processing systems. After vaginal or cesarean births, cord blood will be collected in a safe, painless and simple procedure for about five minutes using a syringe or gravity bag and will be drawn analogous to drawing a blood for a blood test (CBR’s superior…).
After the cord blood has been collected, it will then be moved by a private medical person to a processing facility for storage (What is Cord…). There are a lot of reasons why some preserve their babies’ cord blood, first, it may save the baby or family member’s life in the future, second, cord blood can only be obtained immediately after birth, third, thirty to seventy percent of people needing bone marrow transplant can’t find a match and through cord blood banking proper match for the baby or other family member will improve, fourth, it is advantageous for family members who can be cured with a stem cell transplant like in thalassemia, leukemia, sickle-cell and aplastic anemia and other genetic and metabolic disorders, and lastly, future medical technology might permit stem cells in treating even more disorders and diseases (Good Reasons).

If I were to have a baby I would also bank my baby’s cord blood because it can really help my son or daughter in the future, much especially on emergency cases in which stem cells are needed in saving my son’s or daughter’s life.
Works Cited
“CBR’s Superior Collection ; Processing.” n.d.. Collection, Processing ; Storage, 2 December 2007;http://www.cordblood.com/cord_blood_banking_with_cbr/banking/collection_overview.asp;.
 “Cord Blood Banking.” n.d.. Cord Blood Banking – Should you bank your baby’s umbilical cord blood?, 2 December 2007 <http://pediatrics.about.com/od/agesandstages/i/cord_blood_bank.htm>.
“Good Reasons.” n.d. Good Reasons, 2 December 2007 <http://www.cord-blood.org/id3.htm >.
“What is Cord Blood?”.” n.d. What is Cord Blood & Stem Cell Research: CREATE (Premier International Cord Blood Bank), 2 December 2007 <http://www.createcordbank.com/wicb.asp>.
“What is Cord Blood?” n.d.. Cord Blood Registry – What is Cord Blood?, 2 December 2007 <http://www.cordblood.com/cord_blood_banking_with_cbr/what_is_cord_blood.asp>.

Categories
Banking

Banking System Stability

The aim of this study is to examine if there is a link between Deposit Insurance, Bank Stability, Risk Taking and Moral Hazards. Starting with examination of Deposit Insurance around the world and then moving onto the EU. It is found that Deposit Insurance alone can not provide Bank Stability but requires the support of mature banking regulations, supervision, credibility and strong contracting environments in order to successfully provide Bank stability. However it is found that where there is weak provision of the points highlighted above Explicit Deposit Insurance tends to increase Moral hazard, Risk Taking which then affects the Stability of Banks and vice versa when all points are catered for.
Introduction:
Over recent time-periods financial instability caused through systematic banking crises has affected not only developing but also developed countries of similarity. The consequence of such an event is not only disastrous but also costly politically (at macroeconomic level) and socially since taxpayers foot the bill of these disturbances and both depositor and borrowers lose access to their funds and credit facilities respectively which may result in bankruptcy. However this affect does not stop here but also spreads throughout the economy which causes deceleration in growth, some solvent banks to fail due to contagion, derailment of stabilisation programs and also increases poverty in severe cases. A recent example of this is in turkey which caused confidence to fall amongst domestic institutions resulting in a currency crisis due to enormous foreign capital flight.

Consequently to limit such crises which result in Banking instability many safety nets were constructed and one which will be considered in this study is Deposit Insurance, which was originally formed in the US (1933) in the middle of the great depression with the intent to prevent extensive banks runs. Deposit Insurance Systems have rapidly expanded across the global over the last 25 years and a question which poses every academic and policymakers mind is that does Deposit Insurance System have a Link with Banking Stability? Therefore the remaining of this study will draw upon various studies previously conducted by institutes such as The World Bank, The ECB and Academic Organisations and aim to answer the question proposed above.
Empirical Analysis:
In this section various empirical findings will be consulted which will assist in answering the question proposed in the opening and this will commerce with a paper by Demirguc-Kunt and Detragiache [2000], which then continues through to another paper by Demirguc-Kunt and Kane [2001]. These two papers analyse deposit insurance around the globe using econometric models and provides a good foundation to the remaining of this study. Thereafter a paper by Gropp and Vesala [2004] will be considered which concentrates on the EU’s deposit insurance and banking stability.
The authors Demirguc-Kunt and Detragiache [2000]1 use cross-sectional data on 61 countries from 1980-1997 and highlight some critical points which indicate that with the presence of explicit deposit insurance bank stability tends to be unfavourable due to deregulated bank interest rates. However if this point is inverted this then means that in developed institutes where careful regulation and supervision is provided, bank stability is unaffected. In-addition it was also found that when coverage was increased to unlimited coverage and also included foreign currency, interbank deposits and actual share of deposit, bank stability became a lot more fragile.
Therefore it is possible for one to conclude that in environments where institutional weakness is present banking stability is affected by deposit insurance and this may be the case for developing and emerging economies. Furthermore by increasing the coverage offered to depositors it becomes clearly evident that banking stability is once again destabilised, however this seems to be the case when schemes are funded by the government as apposed to private organisations.
Moving over to the study conducted by Demirguc-Kunt and Kane [2001]2 they examine cross country differences in deposit insurance design and their affects on bank stability. According to the authors they find results empirically significant and in support of the results found by Demirguc-Kunt and Detragiache [2000]. They find that when institutes reside in weak environments where deposit insurance arrangements are poorly designed there is the increased tendency and probability for bank instability and future crises.
This proposition can be confirmed when the frequency of bank crises around the world is considered and it is statistically been proven by Demirguc-Kunt and Kane [2001] that where explicit deposit insurance is inadequately designed crisis are often quite high. In-addition to frail environments it has also been flagged that those countries with poor contracting environments also have the tendency to suffer from banking instability. The principle reason is that the regulations and supervision of such countries will not be fully developed, and with a partially developed banking structure it is relatively impossible to impose property rights and contract enforcement which would allow for information to be provided to its depositors in a timely manner to limit banking instability.
As a result of these empirical findings it is possible to express that in countries with poor supervision, regulation and contracting, deposit insurance invites bank to exploit the weakness in supervision and increase the amount of risky projects they take on and this is once again in equivalence to the findings of Kane [1989] and Demirguc-Kunt and Detragiache [2000]. Now turning to the EU and utilising the study conducted by Gropp and Vesala [2004]3 to answer the question proposed it is found that the author’s empirical findings are quite striking since they provided conflicting result to the ones already provided when econometrics analysis using data on all banks in 15 EU is conducted which is supported by their findings.

Categories
Banking

Auto Loans After Bankruptcy

Bankruptcy is defined as the state of an individual where he/she cannot repay the debts incurred. The American law lays down many ways to file for bankruptcy, namely Chapter 7, Chapter 11 and Chapter 13. Chapter 7 Bankruptcy is the most common form of bankruptcy filing. This is also known as straight bankruptcy or liquidation. In this form of Bankruptcy filing, the debtor appoints a trustee who sells his assets to pay of his debts and the debtor is thus discharged of his debts (Chapter 7 bankruptcy, 2004). According to the law, anyone can file for Chapter 7 Bankruptcy.
It is seen that in case of partnerships or corporation, the individuals associated are immediately discharged from their debts but the corporation or partnership still reels under debt till the limitation period is completed. It is pertinent to note that as this form of bankruptcy entails selling of non exempt assets, businesses might not opt for it. Individuals can file this form of bankruptcy and have the facility of certain assets being exempt from liquidation and are discharged from all debts except debts like child support, fines, taxes etc. (“Chapter 7 bankruptcy”, 2007)
This vast scope of the Chapter 7 bankruptcy has led to it being abused. In order to control the abusive filing of Chapter 7 bankruptcy, legislation proposed certain changes. One of the main changes proposed is that anyone spending more than the allowable limits as ascertained by IRS cannot qualify for filing Chapter 7 bankruptcy. Secondly, unless a person is a resident of a particular State for at least two consecutive years, he/ she cannot file for bankruptcy from that State.

In order to ensure that proper use of loans is made, the law has also suggested financial counseling together with payment to be made in full in case of buying expensive items or receiving cash loan within 60 days of filing for Bankruptcy. Also more kinds of debts are included in the list of non dischargeable debts so as to ensure that the provision for filing bankruptcy is not misused (Chapter 7 bankruptcy Laws, n.d.).
Reasons for filling bankruptcy are numerous, the main one being that an individual wants to start of on a clean slate wiping of all his old debts. The second reason is that people who are on the verge of having their home foreclosed will file for bankruptcy to give them the chance to repay their loan in installments, so also to have their car from being taken away by the auto loan company. Another reason for filing for bankruptcy is when a person’s medical bill is very big and the person cannot afford to pay the same. In such cases, filing for bankruptcy may actually reduce or cancel the entire debt. One of the main reasons is also loss of employment, where the person has lost his source of income, and then he files for bankruptcy (Tim, 2005).
In some cases, it is seen that a person has taken more loans then he can manage at a given time and is constantly harassed by his creditors. In order to stop being harassed by such creditors, people file for bankruptcy so also to challenge the false claims of fraudulent creditors. Filling for bankruptcy also ensures that you get help to repay your educational loan and also to ensure that your essential services are not discontinued and also helps you purchase absolutely essential commodities that one cannot buy otherwise (Bankruptcy, 2004).
The common thought is that once a person files for bankruptcy then he will not be granted a loan immediately nor can he request for a credit card. However, in today’s world this is not the case as most institutions are ready to grant loan or disburse credit cards to persons filing for bankruptcy. These institutions feel that the individual has left his/her old debt behind and has started afresh and can thus be given new loan even though the bankruptcy will stay in his/ her credit note for a period of ten years.
The creditors deal with the bankruptcy information by increasing the rate of interest payable but still lend the money or give them the credit card.  A few creditors might hesitate but their opinion changes once they see that the individual is diligent in repayment. Thus once the repayment schedule is followed properly and without a hitch then the other credit card companies or organizations giving loan will come forward and offer at the same rate of interest as before filing for bankruptcy. It is seen that an auto loan is the best way to rebuild one’s credit in the market (Reeder, 2005).
In case of credit cards, along with increase in rate of interest one might see a decrease in the credit limit available but this again is temporary till the individual’s credibility is restored. Also credit card companies have started issuing secure credit cards to ensure that the credit availed by the person can be repaid.
References
Reeder, C., (2005). Auto Loans After Bankruptcy – How Does a Bankruptcy Affect Your Approval? Ezine @rticles. Retrieved February 14, 2007 from http://EzineArticles.com/?expert=Carrie_Reeder
5 things you can do after bankruptcy. (n.d.). Financeguide 101. Retrieved February 14, 2007 from http://www.financeguide101.com/finance-reports/5-things-you-can-do-after-bankruptcy.html
Chapter 7 Bankruptcy Laws (n.d.). Christianet. Retrieved February 14, 2007 from http://www.christianet.com/bankruptcy/chapter7bankruptcylaws.htm
Chapter 7, Title 11, United States Code. (2007, January 27). In Wikipedia, The Free Encyclopedia. Retrieved 04:42, February 17, 2007, from http://en.wikipedia.org/w/index.php?title=Chapter_7%2C_Title_11%2C_United_States_Code&oldid=103679361
Tim, S. (2005). Top ten reasons people file for Bankruptcy. Ezine @rticles. Retrieved February 14, 2007 from http://ezinearticles.com/?Top-Ten-Reasons-People-File-for-Bankruptcy&id=15274

Categories
Banking

Trends in Banking and International Banking System

Introduction
Over the years, the structure of the banking systems has been continuously and remarkably shifting world over. The number of market participants has risen markedly and the volume of the market activities handled has grown exponentially. The rapid changes taking place in the society pose a great challenge as the commercial banking systems need to embrace and keep pace with the wave of technological and global interaction which has a lot to say in terms of business operation methods. Political and social challenges have also been active in the changing face of the banking systems especially given the multiparty political system of the nonce. [Adams J. A.1997]
These trends in the evolution of commercial banking will help us understand the significant transformations that have occurred, like increase in p and size of the banking activities, the type of banking organisations that carry out banking business and the rate at which some banking institutions have grown to become very large institutions. In addition, we are able to use the information obtained to forecast what the situation might be in the future. (Adams J. A.1997)

This tremendous growth has taken effect over the last two to three decades. Occurrences of recessions aid much in helping transform the behaviour of the banking systems especially in America. This is because after a period of recession the process of recovery ensues slowly hence it forms an appropriate occasion to assess how the new instituted banking systems behaved during such periods.
It is also good to understand the effects these changes on policymaking and how the process of policymaking has influenced or triggered the trends. This article will strictly concentrate only on analysis of commercial banks within a period of past two to three decades. Our interest is drawn as to how the past and present trends may affect the future of banking. (Adams J. A.1997)
Discussion
For the last two or three decades the face of banking has tremendously transformed in various areas which include:

Lending activities
Shareholding
Competitive landscape
Expansion capacity
Level of participation in the market
Proportion of total debts in relation to the respective bank assets held
The level of real estate loans as compared to commercial and industrial loans
Regulations imposed in the industry
The number of banks in the market
The location in the market among others

Technological and global interactions intermarried with political and social changes have had great impact on the operations of the banking systems. With the desire to keep braced with new developments and keep pace with new challenges there has had to be adjustments in the banking system. Various countries are faced with different economic, political, social, demographic and general societal changes. If the changes happen to be the same they take place at different periods of time from country to country. Let us take a look at each of the above elements in relation to various countries over the past two to three decades. (Adams J. A.1997)
Number of Banking Institutions and their Locations in the Market
The structure of banking has changed tremendously over the past thirty or so years with the transformation leading to a marked decline in the number of banking institutions in the industry. Let us look at US in relation to this. The graph below gives us a quick understanding of how the number of commercial banks in the U.S banking industry changed between 1984 and 2002.
From the graph we deduce that the number of banking institutions in the U.S has decreased significantly over the period under consideration. The number of thrift organisations at the beginning of 1984 was well above 15,000 yet by the end of 2003 the figure is down lower than 8,000.
Chart 2: Summary of Deposits Change by Banks in 2003 and 2004
The evolution of the banking industry structure has not shown uniformity over time. The rate at which the number of these banking institutions has been declining reveals a very strong recurring pattern, occurring at an escalating rate in the 1980s and then slowing down in the 1990s. However, the rate of decline drifted consistently lower than that during the preceding eight-year phase.
This as a fact implies that the impact of economic, regulatory and technological changes which have taken place shade light on the future of the commercial banking industry in relation to the U.S and even other parts of the globe, especially given that almost all nations of the world are affected by the same conditions due to globalisation. In addition to that, unit banks have slowly declined in numbers in the market since early seventies and have instead been replaced by institutions with branches. However, even such institutions with branches have also been trended downward along with the unit banks.
The Federal Deposit Insurance Corporation’s projection based on the available historical data shows a downward trend in the growth of unit banks and banking institutions in the year 2013. The last two charts above provide a good summary of the data and projection. As the level of competition in the modern business world rises, the banking institutions are moving their branches further into the rural parts of the countries in order to maximise on customer coverage and market command.
Expansion capacity and Level of participation (competition) in the market
The structure of financial system in terms of expansion capacity and market participation has also undergone a notable shift in that the number of market participants has risen markedly with the volume of their market activities growing exponentially. As an example, the number of Thailand’s quoted companies (Banking Institutions) in the Stock Exchange jumped to 295 in the early 1990s from 130 in the late 1980s and the mobilized capital funds by these firms via issuance of securities more than tripled per annum in the same period, (Pakorn Vichyanond, September 1995).
By the same token, if they are standards enough to hang on, it means that there will be even overly increased number of banking institutions quoted on the stock exchanges especially given the post-modern era of e-Commerce where most business transactions take place over the net and also given the marked deregulation of the banking sectors in many economies. (Pakorn Vichyanond, September 1995).
The level of competition in the U.K commercial banking sector can be talked of as having had quite a long time of development. Trends in competition and efficiency of the banking in Hungary carried out between 1987 and 1991 showed that due to new entry into the Hungarian Commercial Banking, competition in the banking sector increased markedly.  It further indicates that ccompetition has considerably strengthened in some areas of corporate banking. Such areas include those dealing with provision of working capital and trade finance.
This competition level has been rising considerably between 4% and 14% every year. Building branch networks in the UK then faced a sharp challenge of high costs of building them and the fact that most new banks specialized in a narrow range of services. Therefore such banks create less intense competition thus they remain subdued in retail banking as the larger banks enjoy the goodwill of the old companies. Another important issue is that the small banking institutions cannot effectively compete with the large and well established ones by offering complicated cash management and payment services.
This is due to the wide gap between the small banks and the established ones, which means there is little or no interbank trading between them. In addition the larger banks’ charges were lower hence staging an unfair competition. Such effects for example resulted in most Hungarian banks being converted into joint-stock companies with substantial administrative autonomy, while state’s participation and ownership in them has declined.
Lending activities and Proportion of total debts against bank assets held
Right now the market situation in the banking industry in terms of lending is rapidly changing and quite different from what it was a few decades ago. With competition increasing by the day, the developed countries are competing for the market abroad thus increasing their foreign lending since they are expanding their banking activities to these countries.
On the other hand, revision of credit policies has enabled banking institutions to cover a wider scope of activities rather than the obligated credits which they previously had to allocate to agricultural sector in proportion to their total deposits. In fact the commercial banks’ lending trends are expected to become less and less strict even as we head into the future. (Pakorn Vichyanond, September 1995).
The level of real estate loans as compared to commercial and industrial loans
A study carried out to investigate the shifting relations between banks and their business customers in Thailand after 1997 reveals a manifestation of declining bank loaning growth which is an aspect of three major driving constraints. These factors are: – cyclical factors, the outcome from the 1997 Asian crisis and structural factors. They affected both supply and demand for bank credit by either reducing or increasing supply and demand.
Up to 2001 there was a persistent decline in lending growth hence respective decline in profits which made banks to change their strategies, for example they diversified their customer base and scope of activities. Due to heavy debt loans, larger firms have opted for capital markets as an alternative source of funding.
Summary
Even though the banking industry across the globe does not have the same manner of operation, most bankers think about their corporate clients almost in the same terms. They will think of commercial banking where they cash management services, credit services, deposit services and foreign exchanges. Asset-based financing, commercial loans, savings account services and payroll services just fall in any the commercial banking services mentioned.
The bankers also think of clients in terms of investment banking which addresses issues like coverage of mergers, asset securitisation, corporate restructuring and underwriting among others. This therefore implies that changes in banking industry in one part of the globe will closely be related to another part.
Over the past three decades, the activities of investment banks have been in an increasing convergence with those of commercial banks been. This is due to deregulation of the financial sector in many parts of the world. At present, a number of investment and commercial banking institutions have a stiff and direct competition in money market operations and other commercial banking services like advisory work and private placement.
In addition, the current banking industry has greatly diversified business, thus some banks are entering into portfolio management, underwriting of securities while at the same time entering into investments. This happens more so in the industrialised world but even the rest of the world is expected to follow suit given the impact of globalisation.
In conclusion we can say that, based on the above discussed statistics, the world banking sector has undergone great revolutionisation especially in order to cope with the changes that take place in the market. Changes are constant as development takes place hence the banking industry will keep changing to incorporate the benefits of these changes in their operations.

References:
Rousakis E. N. 1997, 3rd edition. Commercial Banking in an era of Deregulation: Greenwood Publishing Inc. Westport U.S.A. pp 238- 252
Business and Sustainable Development: Global Guide: Trends in the Banking Industry http://www.bsdglobal.com/banking/sus_trends.asp
 Adams J. A. 1997. Banking and Investment in Transition: Greenwood Publishing. Mexico, U.S.A
Kaufman, G. G. et al, 1984. Consequences of Deregulation for Commercial Banking. The Journal of Finance: Papers and Proceedings, 3 (39): 789-803 American Finance Association, San Francisco, CA.
 Pakorn Vichyanond, Editor: Anne Johnson. September 1995. The Evolution of Thailand’s Financial System: Future Trends. Thailand Development Research Institute Quarterly Review, 3 (10):16-20.
Weinberg, John A. 1998. Phases in Lending Standards. Federal Reserve Bank of Richmond Economic Quarterly 81 (3):1–18.
Ennis Huberto, M. 2002. Commercial Banking: some recent trends. Preager Publishers Westport U.S.A