The Functions of the Securities Firms and Investment Banks in Saudi Arabia and the United States

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.

Further the substance in charge of supervising the money related framework for a country (or gathering of countries). National banks have an extensive variety of obligations, from managing financial approach to executing particular objectives, for example, cash steadiness, low expansion and full business. National banks additionally by and large issue money, capacity as the bank of the administration, control the credit framework, regulate business banks, oversee trade saves and go about as a loan specialist of final resort.

Secondly, out of the twenty-five stockholders of the Bank, five of these were government owned. Thus showing support of the Bank by subscribing to one-fifth of its $35 million (Schlesinger 74). In addition, among the Bank’s functions was to hold all government money, sell all government bonds, and make commercial loans. However, no voters could dictate its policies or reign in its power, due to its privately owned status (Roughshod 2). Finally, the government also allowed bank notes to be used as payment for taxes.

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).

Investment Banking is now at a crucial junction, where Investment and Commercial Banking are splitting up due to the ring fence which is being built around these two banking areas. As well, the new upcoming regulation, Basel III, will have a huge impact in the investment banks, with higher liquidity and capital requirements, in order to increase solvency and stability in financial industries.

The execution of Kingdom of Saudi Arabia and MENA's economies have surpassed world development. In the interim, Saudi's non-oil division has conveyed quickening development rates as the economy differentiates. Supported by hearty GDP development and macroeconomic security, shopper certainty is well over the provincial normal. Developing private credit and expanded open uses on framework and different activities give a wide premise to powerful open doors over the Middle East, however in Saudi Arabia these are interpreting into especially solid and maintained development in household request. KSA itself has never been more dedicated to supporting financial development. Powerful development in government incomes is supporting twofold digit increments in government consumptions on social, base, and other ventures. Maybe significantly more critical in the long haul, an undeniably deregulated and focused financial environment is supporting a blast of business arrangement as the private area plays an inexorably noticeable part in the economy (AT&T

The United States of America’s financial system comprises of the banking system, financial markets and nonbank financial institutions. (Lee, 2001) Banking system furthermore consists of the Federal Reserve System, foreign banks, commercial banks, offshore banks, credit unions and saving institutions. Financial markets consist of debt and money markets, equities markets and futures and options markets. Lastly, nonbank financial institutions consist of asset-based finance companies, commercial lending companies and insurance companies. This paper is an endeavor to understand the workings and structure of the Federal Reserve Banks of USA.

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.

These banks should ideally be divested of any sort of commercial interest, and must act in the best interest of its nation’s economic stability. A lot of meaning is carried out in being identified as ‘independent’ authority, where the bank possess powers to take its own decisions, approve its own legislature, follow its own policies and offer stability to the nation’s economy.

Banking can be defined as a process through which the finances of a country is controlled and created. These finances are loaned to gain profit through interest. In recent times banks perform varied functions like ATM cards, safeguarding of valuable things, providing lockers, credit cards and online banking. Banks and banking Katy and in other American cities has helped the world economy. The simple method of safeguarding money and lending it to the borrowers leads to a productive flow of money. This process has helped in the development of economies of varied countries.

The American financial industry is a very active industry in the world. Although the history for American financial industry is shorter than other old capitalist counties, such as English, France , Netherland, due to the industry ‘s potentiality, creativity and successful supervision comes from government ,the American financial industry has been growing fast since it was established hundreds year ago. Overall ,at present ,from the aspects of industry scale and structure ,monetary policy and the freedom of transaction ,those are more mature and perfect than any other countries, as al result ,the US financial industry has become the world 's most advanced financial industry .

The main concept of the article is to explain why the New International Financial Architecture (NIFA) was created and who is being benefited from this approach. The discussion begins with an examination of the power structures of the global political economy by focusing on the continued dominance of the USA. The article presents the contradictory relations between USA and global finance will be explored so as to shed more critical light on the NIFA. This article critically examines the NIFA by linking its institutional components to the larger contradictions of the capitalist inter-state system. A contradiction is the constant promotion of financial liberalization in emerging

Somalia is a war-torn nation in East Africa that has been systematically affected by political, economic, and social issues for decades. These issues have profoundly impacted the way that the nation functions as a whole. One of the most significant economic issues that plagues Somalia today is its lack of an effective central bank, and the general scarcity of banks throughout the country. The Central Bank of Somalia does exist, but it is essentially inoperative, as it has no substantial authority and has not officially printed a single bank note since the 1990s1. Currently, the Central Bank of Somalia does not dictate monetary policy whatsoever, and only conducts surveys as it attempts to reconstruct itself 2. Because of this, counterfeit currency makes up a sizable proportion of the money in circulation, and most Somalis rely on remittances transferred from family members abroad to survive. In fact, it is estimated that around 45% of Somalia’s economy is made up of these remittances that come from places like Kenya, Ethiopia, and the United States, where large populations of Somali refugees and immigrants currently live3.

The establishment of Islamic Banking in Malaysia offer contemporary financial services in conformity with Islamic Shariah. Interest-based banking considered to be practicing Riba in financial transaction has Islamic banking is clearly meant for creation of provision for Shariah approved financial transactions.

To better understand the investment banks role it is important to distinguish between what is known as the primary and secondary