International Banking Assignment Example | Topics and Well Written Essays - 4500 words

International Banking - Assignment Example Bank regulation incorporates detailed regulations and guiding principles overriding the operations, activities and acquisitions of the banking organisations.1 The regulation of the banking business activities has seen a number of policies under implementation. This section aims at analysing the different objectives of the regulation in regards to the deposits and investment related business. Further, the disadvantages in the regulation of the businesses due to the behaviours they encourage in the regulated entities of their customers analysed critically. 1.2 Banking Regulation Policy Highlights Financial regulations’ role in influencing the growth of banking business principles has become a key policy issue. The regulation of corporate governance in the financial sector has initially been regarded as a special area with standards, and rules to achieve the objectives of financial regulation involving the safety and soundness of the financial system and consumer, as well as inve stor protection.2 With banking regulation, the traditional principle-agent model used to analyse the relationship between shareholders, directors and the managerial team has given way to broader policy concerns aimed at maintaining financial stability, while ensuring that banks operate in a way that promotes broader financial growth as well as enhancing investor worth.3 The main reason why banking regulation is of much essence is due to systemic risks.4 These are risks whereby, economic problems at one or more banks spill over to a great number of other banks or financial systems as a whole. Regulation whether created at initial stages or after new models are fully operational, ought to obey two principles, which are proportionality and effectiveness. Poorly designed or timed regulation can obstruct responsible providers from entering and competing profitably on a level playing field. Thus, a well equaled approach incorporates recognizing the tradeoffs between protecting customers a nd fostering financial access.5 The laws pertaining to banking regulation appear complex and confusing, but in the real sense, with understanding of the objectives, it brings out a clear understanding of the intended application and projected achievements. 1.3 Main objectives of bank regulation Prudential: involves reducing the level of risk exposure to the bank creditors considerably. Therefore, the regulation aims at protecting the depositors. The concept of prudence is integral to bank regulation and supervision as it connotes the notion that, regulation requires banking activities be undertaken with reasonable care.6 Systemic risk reduction: This aims at reducing the peril of distraction resulting from unpleasant trading circumstances for banks, that in turn cause numerous or prime bank failures. This can also be referred to as ensuring monetary stability. Banks play a pivotal role in controlling the volume of money circulating in the economy of any given state. This in turn,

Liabilities of the company Essay Example | Topics and Well Written Essays - 1000 words

Liabilities of the company - Essay Example The use of insurance is a great way to protect assets. The three most important items that must be protected by insurance are property, income, and liabilities. Most large corporations have billions of dollars in physical assets. These assets such as buildings and machinery should have insurance against fire and natural disasters. On March 11, 2011 Japan was struck by the 4th largest earthquake in the history of mankind. A natural disaster can occur at any time since these are natural events that occur at random. Some of the natural disasters coverage that companies should seek includes earthquakes, hurricanes, tornados, tsunamis, fire, and floods. The liabilities of a company are an important aspect of the capital structure of a company. Normally liabilities of corporate debt are hard to protect against. A method that can be use to create a certain level of protection for debt is to use a portfolio approach to protect the debt by formulating a strong portfolio of financial instrumen ts that serve as a safe haven in case the company is not able to pay for its debt due bad operating results. The liquid portfolio can be partially liquidated to create cash that the firm can use to pay its current debt and other operating expenses such as payroll. Another important asset that must be protected is inventory. ... Insurance can also be used by corporations to protect against workers claims and lawsuits by internal and external stakeholders. When a lawsuit is filed it is often better to settle out of court to lower legal costs and to reduce the impact of bad publicity to the company. The corporate image of the company is sacred. Back in 1998 Nike Corporation lost half its customers instantly due to the revelation of a sweetshop scandal. The use of an internal control system is extremely beneficial to a company. It can be used in order to increase the efficiency and productivity of the entire staff of employees. One of the benefits of the use of internal controls is that it safeguards the assets of the company. The most valuable asset of a company which must be protected at all times is the cash. Cash is the most liquid asset in existence. In the international arena the currency of most countries is different. Three of the most valued currencies in the world are the U.S. dollar, the Euro, and th e British Pound. The U.S. dollar is used as the reserve currency in the majority of the countries in the world. Internal controls can also be used to minimize the theft of inventory in a company. A way to protect the inventory is by placing hidden cameras across the entire warehouse where the inventory is being kept. In the retail environment cashiers must count the money when the cash register is cash out and the manager must verify the amount. Both employees must sign a document regarding the cash. The cash should then be taken to a safe prior to the money being deposited in the bank account of the company. The use of internal controls can prevent the managers and the accounting staff from colluding