Market-based versus bank-based financial systems, Financial Management

Assignment Help:

What do you meant by market-based and bank-based financial systems?

Market-based versus bank-based financial systems implications.

The presence of market-based and bank-based financial systems emerges by comparing national banking structures on the basis of:

1. Integration of commerce and banking that can operate either by banks’ ownership of commercial firms or through commercial firms’ banks ownership. Into the USA and the UK there is almost no integration of banking and commerce. Though in both Germany and Japan there is a close relation between firms and banks. The higher amount of information obtainable to banks operating into Japan and Germany– within comparison to US/UK banks – assists in monitoring the firms and therefore reducing the moral hazard difficulty. Moral hazard is one of the difficulties intermediaries face while lending and illustrates the risk (hazard) which the borrower engages into activities which are undesirable immoral for the lender after the transaction is created.

2. Integration of the provision of bank and non-bank financial services. Each of banks financial services consider as to traditional deposit-based lending, when non-bank financial services are which investment, insurance, underwriting trust and property facilities. A high level of integration characterizes universal banks of Germany, in opposition to the traditionally low integration into the USA and UK. However remember that the regulations of USA/UK have currently been reformed, and higher degrees of integration are at this time possible. The other countries, as like France and Italy, have restricted forms of universal banking.


Related Discussions:- Market-based versus bank-based financial systems

Show the advantages of adjusted discount rate, Q. Show the Advantages of ad...

Q. Show the Advantages of adjusted discount rate? Advantages:- (1) It is simple to understand and simple to calculate. (2) The risk premium rate comprised in the risk adj

Operating cycle., operating cycle in vegetable growing business in uganda.....

operating cycle in vegetable growing business in uganda..

Performance evaluation, Performance evaluation One can determine this b...

Performance evaluation One can determine this by comparing the cash flow from assets and cost of capital. 1. Cash flow from assets Cash flow from assets is calculated

Important features floating rate notes, Reference Index Every FRN choos...

Reference Index Every FRN chooses its own reference index upon which the calculation of each successive new coupon is based. The most commonly used reference index is LIBOR. It

What is institutional finance, What is Institutional Finance A natio...

What is Institutional Finance A nation's economic structure comprise a number offinancial institutions, like banks, pension funds, insurance companies, creditunions. These i

Name two patterns of cash flows for a share of common stock, Name two patte...

Name two patterns of cash flows for a share of common stock. How does the market define the value of the most common cash flow pattern for common stock? Cash flows for a share

Determine the analytical procedures of auditors, Analytical procedures of a...

Analytical procedures of auditors Auditors must apply analytical procedures at the planning and overall review stage of audit. Analytical procedures include the considerati

Capital raising, how can covered bond affect other secutites price

how can covered bond affect other secutites price

Explain the capital market process, Question 1 State the key functions of ...

Question 1 State the key functions of the financial market. Question 2 Define "Bill of exchange". What are its features? Give different types of cheques. Question 3

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd