The Financial System of Bangladesh

Reasons why all financial institutions are heavily regulated and supervised by various different units of governments (both federal and state levels) to cover the following and I state the few importance likely exercising of trust powers, formation of holding and mergers, quantity and quantity of loan and services as well as

There are various categories of banking; these include retail banking, directly dealing with small businesses and persons. Commercial and Corporate banking which offers services to medium and large businesses (Koch & MacDonald 2010). Private banking, deals with individuals, offering them one on one service. The last category is investment banking. These help clients to raise capital and often invest in financial markets. Most global banking institutions provide all these services combined. With all these institutions in existence within the same localities and offering similar services, there is a need to regulate the industry so as to protect the consumer and provide fair working environment for all banks (Du & Girma, 2011).

The Financial Sector: The formal budgetary division comprises of six saves money with temporary licenses, and nine authorized cash exchange firms. The division is little and promising while there is allegedly expansive casual part. The national bank of Somalia (CBS) confronts challenges in building monetary division supervision because of specialized and human asset imperatives. The economy has restricted money, especially in lower groups. Somali banknotes are not promptly accessible, making issues for the poorest nationals.

of government policies and to deal with it for the pursuit of its objectives. The ECB is subject only to

First, banks that provide financial service including every sector of the market. Foreign banks to operate in Australia they required to restrain the deposit taking service to all wholesale markets.

Federal governments through the central banks bear the role sustaining a stable economy for its citizens. Besides the fiscal policy, monetary policy is a core approach utilized to regulate the money supply in the economy. In an economic perspective, increased money supply strengthens the consumers ‘purchasing power prompting them to continue borrowing with an urge to invest. Consequently, interests rate raises while the price for bonds lowers, thus causing inflation. To level, the government may intervene in central banks by increasing the bank lending rate as a strategy to reduce supply of money in the market.

The Fed makes these debt transactions with banks in order to alter total reserves in the banking system. The Fed uses three tools of monetary policy, trying to influence the amount of reserves in private banks. They are Open Market Operations, Discount Rate and Reserve requirements. Open market operations are purchases and sales of U.S. Treasury and federal agency securities. This is the Federal Reserve’s principal tool for implementing monetary policy. The Federal Reserve’s objective for open market operations has varied over the years. In the 1980’s the focus shifted toward attaining a specified level of the federal funds rate. This process was largely complete by the end of the decade. Discount rate is the interest rate charged to commercial banks and other depository institutions or loans they receive from their regional Federal Reserve Bank’s lending facility. Reserve requirements are the amount of funds that a depository institution must hold in reserve against specified deposit liabilities.

Financial Institutions like Bank Solutions Inc. are required to meet the standards regulated by the government to avoid mismanagement of sensitive information. These regulations are solely purposed to mandate financial institutions to protect confidentiality, availability and integrity of individuals, information systems and processes. Some of the applicable regulations and standards are elaborated below:

The investment banks, and subsequent stock brokerage firms, was regulated by the Security and Exchange Commission. The banking entities, in this portion of the financial sector, were used to dealing in high risk business that were structured on the business’ equity and debt capital, instead of the commercial banks’ deposits of customers. The activities in this sector of the financial system were underwriting stocks and bonds, insurance markets, the investments in subprime debt markets and mortgages.

Monetary policy is usually carried out through a country’s money supply which is usually controlled by the central bank of the country. The most common way of conducting monetary policy for the central bank is by changing its base rate. The base rate is use to influence the banks interest rates which they then lend to businesses and individuals.

Mandated services: services which have a high economic cost if not performed at any point in time and where the customer does not have an alternate provider. The economic cost for interruptions in these services are high because customers need these to function in an economy by having liquid assets (most likely cash) for day to day needs. Such services are provided by the Government when the private market fails and so are held in high regard. Isolation of mandatory services is used to provide authorities confidence in the retail banking system over the protection of creditors funds. “By ring fencing retail banking activities, the UK authorities will be able to protect the payments system without having to insure the high-risk products” (Banking, finance, and the role of the state, n.d.).

Considering financial integration would contribute to the development of financial markets that extend across the ASEAN region, it would assist in overcoming the fragmentation of various national financial sectors that result from national regulations and standards such as rating agencies, banking supervision, security commissions and credit

The Bank of Thailand Regional Offices, including the Northern, Northeastern and Southern Region Offices, are under the management of Planning and Budgeting Group. These offices monitor illegal financial activities and status of business groups in their respective regions. Also, they supervise the finance industry and protect consumers in those regions.

formal (money and capital market institutions) and informal (local money lenders, the thrifts and savings associations and so on) groups. In general the Nigerian financial system comprises the regulatory/supervisory authorities, banks and non-bank financial institutions. By the end of 2006, the system comprised Central Bank of Nigeria (CBN), the Nigeria Deposit Insurance Corporation (NDIC), the Securities and Exchange Commission (SEC), the

List of abbreviations List of tables Acknowledgements Abstract 1. 2. 3. 4. 5. 6. 7. 8. Introduction Problem statement Objectives and hypothesis of the study Literature review Structure and performance of the financial sector in