International Banking

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  • Topic: Bank, Basel II, Banking
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Faculty of Business & Law

International Banking

Module Code:UGB 322

|Module Leader: Tim Zhou |Student Name: Sun Yufei | |Workshop Tutor: Charlton, Helen |Student Number: 119026298 | |Data: 3rd May 2012 | |

1. Introduction3

Part A.3

2.Potential Benefits of introducing the international banking system into the developing country3 2.1 Enhance the foreign trade and foreign investment3
2.2 Improve the management level and introduce new technologies4 2.3 Improve the level of banking supervision4
3. Risk of introducing the international banking system into the developing country:5 3.1 Currency fluctuations risk5
3.2 Risk of capital outflows5
3.3 Risk due to operation failure6
3.4 Risk of illegal operation6
3.5 International conduction risk6
3.6 Effect of “Cherry Picking”7
3.7 Difficulty of regulation and banking supervision7

Part 28

4. Regulation of International banking8
4.1 Defect of Basel Capital Accord8
4.1.1 Prone to have leak because the new agreement too refined8 4.1.2 The Internal Rating-Based Approach,IRB too complicated and high implementation costs.9 4.1.3 Attention on market risk and operational not enough9 4.1.4 Information disclosure, the require more administrative burden to the bank that did not build up IRB9 4.1.5 Framework for asset securitization cannot completely avoid capital arbitrage10 4.1.6 The new agreement could lead to deterioration of the bank competitive environment10 4.2 The need for improvement of International Bank regulation11 4.2.1 Should continue to implementation Strengthen the supervision of systemic risks11 4.2.2 Risk measurement models and methods for improvement11 4.2.3 Continue to enhance the effectiveness of innovative financial instruments and capital constraints12 4.2.4 To adapt the trend of Mixed Operation and the development of regulatory cooperation.13 4.2.5 Bring in Market risk and operational risk into the framework of asset securitization13 4.3 To prevent and solve the 'too big to fail' problem13 5. Conclusion:14

6. Refrences:15

1. Introduction

Nowadays, most of the developing country had introduced the international bank system into their country. From the international point of view, banking industry in Latin America and Eastern Europe had grown in the past 20 years; example the Mexico international bank asset had occupied 6.2% of the overall banking system during year 1995 but in the year 2001, it occupied 75% of the overall banking system. The Poland international bank asset during year 1995 was 4.2%, it increased from 4.2% up to 69.3% in the year 2001. In comparison, the banking industry for the developing countries around Asia does not grow as much as the Europe countries. Upon observation the market for banking industry in Asia is still expanding. Example, the international bank assets for Malaysia during year 2001 had occupied 25% of the banking system, and 16% for Korea international bank at the current year.( John,H. and Mihaljek,D. 2001) The introduction of the international bank industry into a developing country might have a lot of benefits but in the other way round it might have negative impact to the country. The following article will discuss further more about the potential benefits and risks of introducing the international bank into a developing country.

Part A.

2.Potential Benefits of introducing the international banking system into the developing country

2.1 Enhance the foreign trade and foreign investment

International banking had improved the host country trade and foreign...
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