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Main Trends of Wholesale Banking

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Main Trends of Wholesale Banking

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  • May 4, 2011
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Identify and critically appraise the main trends that have taken place in corporate and wholesale banking over the past twenty years or so. In your answer make a critical appraisal of the effect these trends have had on the nature and structure of the industry

The recent two decades witnessed the great change in the financial world. In the past, the banks might are limited with the ability of exchange foreign currency, but nowadays, it is available to exchange foreign currency at any time in most of the banks. In the past, a majority of Chinese might have no idea about HSBS, however, there are 108 branches of HSBS in China now. In the past, the banks did not sell stocks in the market, to the contrary, nowadays many commercial banks had began this practice following the J.P. Morgan. It can be seen that the banking system has altered greatly. In accordance with Kent Matthews and John Thompson’s view, three trends have the dominant influence on the alternation of the corporate and wholesale banks, and they are deregulation, financial innovation and globalization, respectively.

At the end of last century, the deregulation of financial markets and banks had been a main force to push forward the development of corporate and wholesale banking. Kent Matthews and John Thompson, the authors of The Economics of Banking, have pointed out that the deregulation happens in two aspects: “one is the removal of impositions of government bodies and another one is the removal of self-imposed restrictions.” In terms of the first one, for instance, United States approved Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 to empower the state banks to break the state barriers and to conduct cross-state cooperation and alliances. Meanwhile, the banks removed the self-imposed restrictions, for example, by setting the same rates for a particular project. After a series of research, Matthews and Thompson also recommended that the process of deregulation was carried...