Financial Market
PART 1
With reference to the reading “ Globalizing International Banking”
a/ The principal difference between international banking and global banking
The article provides a certain classification of two banking models bases on the way their foreign assets are financed. The international model of banking system gather their funds via domestic market and then allocated to borrowers in a foreign market. By contrast, Global Banking generates funds in a foreign market and finances its claims on borrower in the same foreign market. In this way we can see that international bank concentrates on cross border business while global bank mainly focus on local market businesses.
b/ Identify five ways in which a bank headquartered in the USA can fund loans to a borrower in Japan, and classify them as examples of international or global banking
With reference to the article, we can distinguish five ways which an USA bank can fund loans to a borrower located in Japan as follows:
* USA depositors deposit their saving to Bank Head Office which allow them to make loans to Japan borrowers via cross-border loan processing. Since this process involves cross-boundary it is considered as International Banking. * USA customers make deposit to head office where in turn deposits these funds at its Bank affiliate in Japan. The Bank affiliate then give these funds as loans to Japan borrowers. This is also an International banking system. * Another way to fund loan in this case is that Head Office in USA gets deposits directly in Japan market and in turn gives loans to Japan borrowers. The whole process is done by head office in USA without involvement of any local bank affiliate or USA saver. Since this case also involves cross border process , it s classified as International Banking system. * An different way is that Bank affiliate in Japan can generate fund by their own from Japan savers and gives these funds as loans to Japan Borrowers in the same
With reference to the reading “ Globalizing International Banking”
a/ The principal difference between international banking and global banking
The article provides a certain classification of two banking models bases on the way their foreign assets are financed. The international model of banking system gather their funds via domestic market and then allocated to borrowers in a foreign market. By contrast, Global Banking generates funds in a foreign market and finances its claims on borrower in the same foreign market. In this way we can see that international bank concentrates on cross border business while global bank mainly focus on local market businesses.
b/ Identify five ways in which a bank headquartered in the USA can fund loans to a borrower in Japan, and classify them as examples of international or global banking
With reference to the article, we can distinguish five ways which an USA bank can fund loans to a borrower located in Japan as follows:
* USA depositors deposit their saving to Bank Head Office which allow them to make loans to Japan borrowers via cross-border loan processing. Since this process involves cross-boundary it is considered as International Banking. * USA customers make deposit to head office where in turn deposits these funds at its Bank affiliate in Japan. The Bank affiliate then give these funds as loans to Japan borrowers. This is also an International banking system. * Another way to fund loan in this case is that Head Office in USA gets deposits directly in Japan market and in turn gives loans to Japan borrowers. The whole process is done by head office in USA without involvement of any local bank affiliate or USA saver. Since this case also involves cross border process , it s classified as International Banking system. * An different way is that Bank affiliate in Japan can generate fund by their own from Japan savers and gives these funds as loans to Japan Borrowers in the same