Global Banking

Global Banking

Global Banking

Global Banking

Synopsis

Few sectors of the global economy equal banking and financial services in dynamism or structural change. In the mid-1980s, regulatory and technological change were the main catalysts for the transformation of the industry, making entrenched competitive structures obsolete and mandating the development of new products, new processes, new strategies, and new public policies toward the industry. In Global Banking, authors Roy C. Smith and Ingo Walter assess the transformation that is taking place worldwide in the financial industry--its causes, its course, and its consequences. Beginning with an overview of recent developments, the authors consider the major dimensions of international commercial banking, including the issues of cross-border risk evaluation and exposure management and the creation of a viable regulatory framework in a global competitive context. They link the field of international commercial banking with international investment banking, and identify the factors that distinguish winners from losers in each activity of global banking. The book concludes with a section on the problems of strategic position and execution.

Excerpt

Few sectors of the global economy equal banking and financial services in dynamism or structural change. When we began work on this project in the mid-1980s, transformation of the industry was already under way. Regulatory and technological changes were the main catalysts, making entrenched competitive structures obsolete and mandating the development of new products, new processes, new strategies, and new public policies toward the industry. This rapid evolution in one of the most important yet least understood international industries gave rise to our 1990 book on this subject.

Since that time developments have, if anything, accelerated. Financial centers, in vigorous competition with each other, have undergone further regulatory change in their efforts to capture a greater share of international trade in financial services, even as common efforts at the regional and global level have tried to support safety and soundness and a reasonably level competitive playing field. Banks and securities firms have had to devise and implement new strategies--sometimes leading events or (perhaps more often) responding to them--and the financial services industry has seen a wave of mergers, acquisitions, and strategic alliances in virtually all parts of the world. Severe recession in the early 1990s battered the industry in Europe and Japan, and to a lesser extent in the United States, even as cycles in interest rates, volatile exchange rates, and economic transformation in emerging markets contributed to a boom in capital markets and trading activity. Much of the conventional wisdom of the late 1980s, such as the dominance of Japanese banks in the global financial system, proved to be wrong just as, no doubt, much of today's conventional wisdom will lose meaning in an industry whose reconfiguration has some way to go.

In this book we attempt to assess this transformation process--its causes, its course, and its consequences. We begin with an overview of recent developments. We then consider in some detail the major dimen-

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