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Research proposal on banks risk management
Short note on banking risk and management
Commercial banks eassy
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Introduction
It is interesting to observe the operations of commercial banks with special emphasis on the ways and means that are put in place to deal with risks that may arise. In this chapter, the researcher will take a look at the kind of regulatory environment that has been internationally proposed for banks and the kind of changes that have happened over time. The researcher will start by addressing the reasons that attributed the international banking body to decide to make regulatory standards for all banks. Under the same section, the researcher will deal with an overview of the three standards that have been proposed over time. The first will be the be the Basel I then followed by Basel II and lastly the researcher will focus on Basel III and the underlying challenges, if any, that need to be addressed in future proposals that will be a base for this researcher’s proposal for a new rating system specifically designed to address issues in Lebanon banks. This researcher believes that the internationally set rating system does not allow better ratings for banks in regions that have political instability even if the banks have the capability of performing better than in other regions that have political stability.
In part two of this research, there will be focus on credit rating and models including the rating systems, and the private rating agencies and the models that they use in their gradation. There will also be focus on the private rating agencies and their adoption of the Basel recommendations and requirements in rating of commercial banks. This is the same part that the researcher will look at the origin of rating of commercial banks in Middle East and Lebanon in particular. The reasons leading to low gradation of...
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The financial crisis of 2007–2008 is considered by many economists the worst financial crisis since the Great Depression of the 1930s. This crisis resulted in the threat of total collapse of large financial institutions, the bailout of banks by national governments, and downturns in stock markets around the world. The crisis led to a series of events including: the 2008–2012 global recessions and the European sovereign-debt crisis. The reasons of this financial crisis are argued by economists. The performance of the Federal Reserve becomes a focal point in this argument.
Taylor, J. B. (2009). The financial crisis and the policy responses: An empirical analysis of what
Originated by John Moody in 1909, the Moody’s rating system provides investors with grades to evaluate the creditworthiness of securities to sell to investors. Like we discussed in class, there are nine grades that range from least risky to most risky (“Ratings Definitions,” 2014). Prior to late 2007, Moody’s was a highly trusted rating company.
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Globally, banks have been facing big challenges in the last few years and continue to do so. As a result of the financial crisis, the regulators have tightened the minimum capital requirements with the aims to create a more solid and shock-resistant banking system especially for the so called Global Systemically Important Banks (G-SIBs). The Financial Stability Board is expecting to raise the total loss-absorbing capacity
Mullard, M. (2012). The Credit Rating Agencies and Their Contribution to the Financial Crisis. The Political Quarterly, 83, 77-95
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In terms of looking at how credit rating agencies affected the market as a whole, they played a role within the mortgage crisis as they gave way to a real estate credit bubble. The mortgage crisis seems to have b...
The theme of this essay outlines two things. One, the key elements of Bretton woods system and second, the characterisation of Bretton woods system by Ruggie as ‘embedded liberalism’, and how far he succeeds in it. The Bretton woods system is widely referred to the international monetary regime, which prevailed from the end of the World War 2 until the early 1970s. After the end of the World War 2, the need of international monetary framework to boost trade and economic; growth and stability, was important. Taking its name from the site of the 1944 conference, attended by all forty-four allied nations; the Bretton Woods system consisted of four key elements. First, to make a system in which each member nation has to fix or peg his currency exchange rate against the gold or U.S. dollar, as the key currency. Secondly, the free exchange of currencies between countries at the established and fixed exchange rate; plus or minus a one-percent margin. Thirdly, to create an institutional forum, so-called International Monetary Fund (IMF), for the international co-operation on money matters: to set up, stabilize, and watch over exchange rates. Fourth, to remove all the existing exchange controls limiting (protectionism) policies by the members, on the use of its currency for international trade. In practice the first scheme, as well as its later development and final demise, were directly dependent on the preferences and policies of its most powerful member, the United States. According to John Gerard Ruggie, 1982, this Bretton woods system of monetary co-operation represented the type of liberalism which characterise “domestic social economic stability along with a liberal trading order.” He referred this system as ‘embed...
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A variety of groups are concerned in bank profitability for various reasons. The bank shareholders would want to know if the value of their investments is high or low. The investors also use current and past performance to predict future price of the banks’ shares traded on the stock exchanged. The management of the bank as trustee of the shareholders is evaluated and compensated on the basis of how well their decisions and planning have contributed to growth in assets and profits of their banks. Employees of bank also are concerned with profits, since their salaries and promotions are frequently tied to the profitability performance of their banks. Depositors use bank performance and profitability as indicators of security for their deposits in the banks. Finally, business community and general public are concerned about their banks’ performance to the extent that their economic prosperity is linked to the success or failure of their banks.