12-08-2014, 03:15 PM
SEMINAR REPORT ON GLOBALIZATION AND ITS EFFECTS ON THE BANKING MANAGEMENT
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Abstract
This paper describes one of the major challenges of the present: globalization and its effects on the banking.
Globalization is now increasingly recognized as central to the growth of market economies. For the banking sector, this
represents both a demand as well as a new landscape of business opportunity.Several years ago, the main part of the
banks did not consider the globalization problems relevant for their operations. Recently, the banks began to realize the
major impact of the globalization over the way of creating the banking risk in the future. The banking management in the
context of globalization represents one of the challengesof these days. Starting from literature in the globalization field in
this paper focuses on several relevant issues related to banking management.
Introduction
The main objective of this paper is to investigate theoretical and practical aspects of bank management, major
structural changes and trends occurring in bank management, in the context ofglobalization.
To achieve this goal, I had the following specific objectives:
description and analysis of the globalization process, mainly in terms of economic and financial component
making a theoretical analysis of globalization (dominant theories, conceptual aspects, trigger sand existing
typologies) and the effects they have on the real economy
determination clearly and using specialist vocabulary of recent changes that have occurred in banking
management caused by globalization
de lineation of possible trends manifested in bank management in the current context.
One of the goals of this paper is top resent and analyze in detail the effects of globalization on the banking system
and their impact on bank management. To achieve the objectives we started from the assumption that macroeconomic
developments have a direct impact on bank management. It thus confirms the hypothesis namely the existence of direct
influence of macroeconomic development son bank management
Globalizationinthe contemporaryeconomy
The term “globalization” hasquickly spread and was used more often summarizing major change that requires a
new terminology to describe new realities. Contemporary challenge is to define precisely this ongoing phenomenon on
that has a planetary importance.Glynn and Sutcliffe (1992) considers globalization as an “extension of capitalist
relationsof production”at global level. Montbrial (2003) writes that "the idea of globalization is closely linked to the idea
of market economy and there for economic liberalism, hence its strong resonance”. Theseviewsare widespreadand
seemto dominate specialized literature.
Globalization is a concept of ten used to identify a new planetary phenomenon, fusion of consumer markets,
production factors, labor, technology, financial and cultural capital. In other words, globalization is the growing
importance of the global market in trade and financial affairs. Also, globalization is the tendency tore order the entire
world in a global society, which is basedon the community' sover all decision, aimed at solving problems that affect the
entire planet.
Globalization is a dynamic and complex process and a non-reversible phenomenon. “The globalization system,
unlike the Cold War system, is not static, but a dynamic ongoing process: globalization involves integration of markets,
nation-states and technologies to a degree never witnessed before - in a way that is enabling individuals, corporations and
nation-states to reach around the world farther, faster, deeper and cheaper than ever before, and in a way that is also
producing a powerful backlash from those brutalized or left behind by this new system” (Friedman, 1999).
In the literature there are various theories as to the elements that caused the globalization from those who see
technological innovation as the only trigger of globalization to those for which prevails political factors. For Popescu et
al.(2004) globalization has three main causes: technological, political and economic. Theyhavestarteda process
where'geographical distance has become an insignificant factor in establishing and sustaining cross-border ties,
Effects of globalization on the banking management
Globalization of financial markets is a process of an unprecedented scale that has major consequences on
financial banking management. Banks were among the institutions most affected by financial globalization. To cope with
constant changes in the economic environment in particular financial liberalization and new technologies, banks were
forced to adopt new strategies in banking management. The economic effects of globalization on the banking system may
be positive or negative, and the task of those in charge of the management of the banking system is to maximize the
positive effects and minimize the negative ones.
Deregulation and the increasing sophistication of financial products, services and processes have increased the
complexity and the diversity of financial risks. Changes in financial and banking markets in the last two decades have
resulted in significant changes in the risk profile of companies and financial institutions.The significant role of these
changes in both economic growth and financial stability has made the financial risks’ management more important than
ever.At the same time these transformations represent the key function of modern financial and banking institutions
Futuretrendsinbanking management
The world banking system has gone through many transformations in the last severaldecades. It is difficult to
predictthe exacttrendthat willhave in future thebanking management but we can speculate that the two directions would
leave their mark on future developments:
one focused onchangesin financial servicesingeneral andbankingin particular, andthespecific regulations;
second, this is more about financial markets, especially foreign ones, in which banks must operate.
Assome authorsconsider,thefutureof banking and financialservices industrywill changesignificantly.These
changesrelate to:
reduction ofthe number and typeof financial institutions andbank
removinggeographicalbarriersandlegislativeaffairs
conductingmergers and acquisitions,favoring the banking concentration
Environmental changeswill affectbanks' financialmanagementin many ways, the most important are:
bank managerswillhaveto be cautious about risks using several means, the most significant of which is
strengthening capital,the new regulations proposed by the Basel Committee for capital adequacy is expected to
be the cornerstone of international banking process
riskmanagementinbankswill bepermanently monitoredand controlledthroughthe systematic analysis ofquantity
and qualityof managers
Conclusion
The paper highlights the impact of globalization on the banking system and severalsignificant changes that have taken
place in modernbanking.Banks areundoubtedlysomeof the actorsmostaffected byfinancial globalization. The world
banking system has gone through many transformations in the last several decades. There have been dramatic regulatory,
considerable changes in banking technologies, the liberalization and the globalization of the financial market, the
increased competition. The deepening struggle for growth of the market share created new opportunities and challenges
for international banking institutions. These specific changes have required continuous renewal of methods and
techniques used in banking management, in order to control the risks. It is difficult to predictthe exacttrendthat willhave
in future thebanking management but the bankmanagersmust be preparedto cope withcontinuous changein this area.