Banking Industry : An American Multinational Banking And Financial Services

The fact that banks control 97% of the world's money supply makes them a vital institution. Banks are the engine of our modern financial system and a source for economic growth. The bank's ability to create credit can have destructive effects; the Great Depression of 1929 and the Great Recession of 2008. In both cases, banks spurred on an asset bubble through overextending credit to aid the purchase of assets. The result was an economic collapse that wiped out wealth and reduced credit creation which stalled productive investments. The lessons of the two great economic collapse support the notion proposed by the author, that bank credit for transactions that do not contribute to the economy should be restricted.

The Merriam Webster dictionary defines the noun “bank” as “an establishment for the custody, loan, exchange, or issue of money, for the extension of credit, and for facilitating the transmission of funds.” In essence it is an institution that serves as a medium of flow of funds between users and savers. A bank is a financial institution that links the flow of funds from savers to users and back. For the purpose of this audit report we will broadly classify banks into two major categories: commercial banks and investment banks.

The banking industry has over the years evolved from simple to large and complex organization. They have grown from one street building into having multiple branches some of which are international. Their clients range from individual and institutions to governments and other banks. Banks do not manufacture physical things. Their work is simply services for money (Koch & MacDonald 2010). Such services include storing, lending and managing money. All people and institutions, as well as governments, need money to operate accordingly.

First, an overview of the Twentieth Century American Banking System. Banking regulations are implanted to strengthen the banking sector and to eliminate bank panics. For example, the creation of the Federal Reserve System in 1913 was largely a response to lessons learned in the Panic of 1907. Industry regulation and structure, risk management viz. moral hazard, adverse selection.

Lending institutions have been around since the late 1700’s. Banks are establishments that are authorized by the government to accept deposits, pay interest on deposits, clear checks, make loans, act as an intermediary in financial transactions and provide other financial services to customers.

The banking industry builds and sustains Financial relationships with its consumers of all sizes to supply Financial products and services to stimulate economic growth. The industry participants produced a variety of services from savings accounts to home and business loans mortgages checking accounts and

The banking industry and Wells Fargo must use analytics to better understand market segments to allow them to correctly identity which markets to enter. Without the correct capital allocation within certain markets, any financial institution can see their revenue shares dwindle thus creating a direct need for market forecasting.

The American Banking system has always focused on order, resiliency and the ability to withstand the storm. When comparing banking systems, it is required analyze both the strengths and the weaknesses of each system. While examining the American banking system, a key strength that is presented is the pride if its resiliency, “these improvements in the resiliency of the banking system have been reinforced by a series of key capital and liquidity rules that have been enacted in the United States, including the Basel III capital and liquidity frameworks as adopted in more stringent form” (The State of American Banking).

1. Has the inflation rate in Canada increased or decreased in the past few years? What about interest rates?

The banking industry faces many barriers to globalization. Overcoming cultural differences and dealing with varying regulations and financial systems make it very difficult to establish a truly global bank. Citigroup (or Citi), formed in 1998 by the merger of Citicorp and Travelers Group, is a leader in international banking and one of the largest companies in the world, in terms of assets. In 2010 it had $65 billion in revenues and 263,000 staff around the world

First, an overview of the Twentieth Century American Banking System. Banking regulations are implemented to strengthen the banking sector and to eliminate bank panics. For example, the creation of the Federal Reserve System in 1913 was largely a response to lessons learned in the Panic of 1907. The Creation of the Federal Reserve System in 1913 marked the beginning of the modern era of Banking in America. From 1864 until 1913, American banking was dominated by a federally regulated system of the national banks. They alone were allowed to issue currency, and the currency notes they issued were printed by the federal government with uniform size and design. How much currency a national bank could issue depended on its capital. Although, this

Banks can be described as a financial institution where deposits are accepted and credited from the public. There are very essential in the financial systems as it influences the economy of a country. Most of the countries follow a system which is known as fractional reserve form of banking. Under this policy banks holds liquid assets which is equal to only a part of your current liabilities. These institutions are subjected to minimum capital standard which is called Basel Accords. Banks are specific place which will ensure that your finances are secured.

Banking industry is currently operating in the maturity stage. There are many players as a result of which the competition is quite high. Competition is broadly based on the levels of fees charged, reputation, the range of services and products provided. As the industry consolidates and the range of services broadens, the size and geographic spread of industry players in increasing. Providing a high set of barriers is the capital and regulatory requirements within the banking sector. Entities that want to start up as a commercial bank and/or investment bank or securities dealer face significant establishment costs in order to gain acceptance and meet market reputation. Furthermore, start-ups require up-front expenses in order to establish proper distribution channels. Globalization is high and the trend is increasing. Cross-border sales and acquisitions of banking operations are also occurring, as assets are shuffled in the race to raise capital.

The United States banking industry has been a problem ever since the fraud and corruption from the market crash of ’08. There have been two sides arguing what we should do to these banks. Many people say, “We need to split up the big banks into smaller banks.” Their argument is that the smaller banks will be easier to monitor to make sure no fraud is going on and it will cause there to be more competition in the industry which will lower interest rates. The other side of the argument where many people also stayed is that the big banks don’t need to be split up. They just need a bailout to get back on their feet and they can sort this mess out. The arguments stand on two principles one side says the banks are corrupt and need to be disbanded, and the other side’s states that the banks are too big to fail; come ground is difficult for these two but they both want to fix the economy.

One of Citigroup’s main concerns was the risk of their exposure from holding leveraged loans. Due to the increasing risks and