Samenvatting
Global banking summary
- Vak
- Global Banking
- Instelling
- Vrije Universiteit Brussel (VUB)
Summary of the course global banking based on slides and courses given by Prof. Dr. Freddy Van Den Spiegel.
[Meer zien]Voorbeeld 4 van de 92 pagina's
Voorbeeld 4 van de 92 pagina's
In winkelwagen3 beoordelingen
Door: anassserry • 1 jaar geleden
Door: clinton97 • 2 jaar geleden
Door: kevinwaes9 • 2 jaar geleden
Voorbeeld van de inhoud
GLOBAL BANKINGProf. Dr. F. Van Den Spiegel
Pauline Delphine A Verhelst
VUB | 2021-2022
,TABLE OF CONTENTS
INTRODUCTION .............................................................................................................................................. 3
CHAPTER 1 – THE FINANCIAL SYSTEM AND THE ROLE OF BANKS ..................................................................... 5
1.1. A BRIEF HISTORY ......................................................................................................................................... 5
1.2. WHAT IS A BANK? ....................................................................................................................................... 7
1.3. THE SPECIFIC ROLE OF CENTRAL BANKS ............................................................................................................ 7
1.4. THE ROLE OF COMMERCIAL BANKS AS TRANSMISSION MECHANISM OF MONETARY POLICY ........................................ 10
1.5. THE CONCEPT OF “FRACTIONAL BANKING” AND MONEY CREATION BY BANKS ......................................................... 10
1.6. THE ACTUAL CHALLENGES OF THE FINANCIAL SYSTEM ........................................................................................ 11
1.7. WHY FINANCIAL INTERMEDIATION IS NEEDED AND HOW IT CAN BE ORGANIZED ...................................................... 15
1.8. WHY ANY FINANCIAL SYSTEM IS POTENTIALLY UNSTABLE ................................................................................... 20
1.9. BANKS TRANSFORM FINANCIAL FLOWS, WHICH INCREASES RISKS ......................................................................... 20
1.10. BANKS AND INFORMATION ECONOMICS ......................................................................................................... 20
1.11. BANKING PRODUCTS AND SERVICES............................................................................................................... 21
1.12. TYPES OF BANKS ....................................................................................................................................... 21
CHAPTER 2 – ORIGIN AND CONSEQUENCES OF THE FINANCIAL CRISIS OF 2007 ............................................. 23
2.1. THE EXTRAORDINARY ENVIRONMENT SINCE 1990 ........................................................................................... 23
2.2. WEAKNESSES OF THE FINANCIAL SYSTEM........................................................................................................ 30
2.2.1. Dangerous strategies of banks .................................................................................................... 30
2.2.2. Increasing complexity/opaqueness of innovative products ........................................................ 31
2.3. THE CRISIS STARTED 2007 .......................................................................................................................... 35
2.4. THE (EU) BANKING SECTOR TODAY ............................................................................................................... 36
CHAPTER 3 – THE NEW REGULATORY FRAMEWORK FOR BANKS ................................................................... 40
3.1. THE BUILDING BLOCKS OF FINANCIAL REGULATION/ SUPERVISION........................................................................ 40
3.1.1. Micro-prudential regulation/supervision .................................................................................... 41
3.1.1.1. Focus on the soundness of the individual bank ...................................................................................... 41
3.1.1.2. History of BASEL regulation .................................................................................................................... 42
3.1.2. Focus on market conduct ............................................................................................................ 47
3.1.3. Focus on lender of last resort ...................................................................................................... 48
3.1.4. Deposit guarantee scheme .......................................................................................................... 49
3.1.5. Focus on macro-prudential regulation/ supervision.................................................................... 49
3.1.6. Focus on crisis management ....................................................................................................... 50
3.1.7. Other important aspects ............................................................................................................. 52
3.1.7.1. Structural reform .................................................................................................................................... 52
3.1.7.2. SIFI ........................................................................................................................................................... 52
3.1.7.3. Banking union in the EU .......................................................................................................................... 53
3.2. SITUATION OF BANKS TODAY ....................................................................................................................... 54
3.2.1. Profitability = major problem ...................................................................................................... 55
3.2.2. Liquidity ....................................................................................................................................... 58
3.2.3. Sum of all the impact .................................................................................................................. 58
3.2.4. Impact of new regulation on bank profitability........................................................................... 60
CHAPTER 4 – BANK BALANCE SHEET AND INCOME MANAGEMENT ............................................................... 61
4.1. BANKS VERSUS OTHER COMPANIES ............................................................................................................... 61
4.2. BANKS’ BALANCE SHEET AND INCOME STRUCTURE ........................................................................................... 62
4.2.1. General introduction ................................................................................................................... 62
4.2.2. A typical retail bank .................................................................................................................... 63
4.2.3. A typical investment bank ........................................................................................................... 63
4.3. BANKING RISK TYPES AND MANAGEMENT: THE PRICE TO PAY FOR RETURN ............................................................ 64
4.3.1. Credit risk .................................................................................................................................... 64
4.3.2. Liquidity risk ................................................................................................................................ 66
4.3.3. Interest rate risk .......................................................................................................................... 67
4.3.4. Currency risk ................................................................................................................................ 69
4.3.5. Operational risk ........................................................................................................................... 70
1
, 4.3.6. Leverage/ solvency risk ............................................................................................................... 70
4.3.7. Rating risk ................................................................................................................................... 70
4.3.8. All the other usual business risks ................................................................................................. 71
4.4. RISK VERSUS PROFITABILITY ......................................................................................................................... 71
4.5. CAMELS ................................................................................................................................................ 71
CHAPTER 5 – INTERNATIONAL BANKING ....................................................................................................... 72
5.1. THE NEED FOR AN INTERNATIONAL APPROACH OF THE FINANCIAL SYSTEM ............................................................. 72
5.2. WHY BANKS BECOME INTERNATIONAL ........................................................................................................... 75
5.3. THE SPECIFICITY OF THE EU FINANCIAL SYSTEM ............................................................................................... 76
5.3.1. The difficulty to understand Europe. ........................................................................................... 76
5.3.2. A short history of Europe. ............................................................................................................ 78
5.3.3. Monetary integration: an example of pragmatism. .................................................................... 79
5.3.4. Financial integration, the next step............................................................................................. 82
5.3.5. The crisis and its consequences ................................................................................................... 84
5.3.6. The impact of the Brexit .............................................................................................................. 85
5.4. INTERNATIONAL ACTIVITY ........................................................................................................................... 85
CHAPTER 6 – BANKING STRATEGY ................................................................................................................ 87
6.1. WHAT MAKES LIFE FOR BANKS EASY/TERRIBLE................................................................................................. 87
6.2. THE FIVE DRIVING FORCES OF THE BANKING SECTOR ......................................................................................... 89
6.2.1. Politics economics ....................................................................................................................... 89
6.2.2. Regulation ................................................................................................................................... 90
6.2.3. Customer ..................................................................................................................................... 90
6.2.4. Competition ................................................................................................................................. 91
6.2.5. Technology .................................................................................................................................. 91
6.2.6. Challenges ................................................................................................................................... 91
6.2.7. Opportunities .............................................................................................................................. 91
2
, Introduction
- GOAL: understand banking environment, bank management and banking strategies
- TEXTBOOK: Casu, Giradone, Molineux, « Introduction to banking » Prentice hall 2006
(optional)
Summary
- Key in banking: definition of money
o Has not changed since the Egyptians
o If we all believe it exists, it’s there
o Concept of money is key
o Rationally money, ‘gold’, does not exist
o If ECB collapses
o Million euro’s not worth anything anymore
o Interest rates
§ Fluctuates
§ Digital development and revolution
§ Increase of productivity? Disappointment
§ Productivity stopped increasing
§ Secular stagnation
• No reason to give interest rates
• Reason why interest rates go to zero
§ For banks this is an intermediary
• Banks can survive with negative interest rates
• Everyone who has money is losing the interest rate in purchasing power
every year
• How long can this continue?
§ Even if interest rates are positive but there is inflation, the real interest rate will
be negative
• It is all about the margin
- Financial intermediation: banks are built on the illusion of money
o Activities are changing all the time
o It is about intermediation of money
- Financial regulation
o Changing true the years
o A lot of challenges
o The green deal
o ESG = hype of a fundamental trend
§ Starts with global warming
§ Debate about sustainability
§ Being correct ecologically
o Capital system: believe that democracy is the best solution
§ Godfather: Adam Smith
§ Ancient regime against the liberal world
§ Liberty to individuals
§ Free individual that will do it himself
§ Key: it is a free market, not organized by church, religion, …
§ Selfishness leads to best solution for collective public
• Market
§ Is this all an illusion?
§ Can we drive the economy with a free market
§ Or is collectivity important?
o Basel 1-3
3
Voordelen van het kopen van samenvattingen bij Stuvia op een rij:
√ Verzekerd van kwaliteit door reviews
Stuvia-klanten hebben meer dan 700.000 samenvattingen beoordeeld. Zo weet je zeker dat je de beste documenten koopt!
Snel en makkelijk kopen
Je betaalt supersnel en eenmalig met iDeal, Bancontact of creditcard voor de samenvatting. Zonder lidmaatschap.
Focus op de essentie
Samenvattingen worden geschreven voor en door anderen. Daarom zijn de samenvattingen altijd betrouwbaar en actueel. Zo kom je snel tot de kern!
Veelgestelde vragen
Wat krijg ik als ik dit document koop?
Je krijgt een PDF, die direct beschikbaar is na je aankoop. Het gekochte document is altijd, overal en oneindig toegankelijk via je profiel.
Tevredenheidsgarantie: hoe werkt dat?
Onze tevredenheidsgarantie zorgt ervoor dat je altijd een studiedocument vindt dat goed bij je past. Je vult een formulier in en onze klantenservice regelt de rest.
Van wie koop ik deze samenvatting?
Stuvia is een marktplaats, je koop dit document dus niet van ons, maar van verkoper paulineverhelst. Stuvia faciliteert de betaling aan de verkoper.
Zit ik meteen vast aan een abonnement?
Nee, je koopt alleen deze samenvatting voor €5,49. Je zit daarna nergens aan vast.
Is Stuvia te vertrouwen?
4,6 sterren op Google & Trustpilot (+1000 reviews)
Afgelopen 30 dagen zijn er 72001 samenvattingen verkocht
Opgericht in 2010, al 14 jaar dé plek om samenvattingen te kopen