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Issues in Financial Stability Assignment

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Added on  2021-02-20

Issues in Financial Stability Assignment

   Added on 2021-02-20

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ISSUES INFINANCIALSTABILITY
Issues in Financial Stability Assignment_1
Table of ContentsINTRODUCTION...........................................................................................................................3MAIN BODY...................................................................................................................................3Question 1. Effect of lower interest on bank's performance and financial stability...................3Question 2. Analyse the competitive threat of Big-Tech and Fin-tech companies for bankingintermediaries and the implications for financial stability..........................................................6CONCLUSION................................................................................................................................9REFERENCES..............................................................................................................................10
Issues in Financial Stability Assignment_2
INTRODUCTIONThe term financial stability can be defined as a kind of financial system which dissipatesthe financial imbalance which raise into financial market (Horvath and Vaško, 2016). Basically,the main objective of this is to make financial activities stable as much as possible. There arevarious kind of issues in the aspect of financial stability such as hyper inflation, stock marketcrash etc. The project report covers about the issues of financial stability. As well as in thereport, effect of lower interest of bank's performance is mentioned. Along with in the end part ofreport, competitive threat of Big Tech and Fin tech companies is also discussed in broad sense. MAIN BODYQuestion 1. Effect of lower interest on bank's performance and financial stability.The banks are institutions who involve in the process of collecting savings from publicand providing financial assistance to needed people and small businesses (Hak, Fitzpatrick,Bishop, 2014). In this case, the bank's earning depends on the interest which they get from theloan. If interest rate is higher then it will be beneficial for banks to earn more profit. While on theother hand, if interest rate is lower then it will be beneficial for public who get loan from bankand it will be loss to banks. Basically, the interest rate is decided by central bank of a particularcountry. It is not under control of banks as well as central bank also plays an important indetermination of limit of loan which will be provided by bank to customers. Basically, thecentral bank plays an important role which are as follows:Crisis manager- The central banks act as crisis manager for banks because they provideguidance to overcome from financial issues. Like some banks face the issue of lowerprofitability and in this case, the central bank act as mediator to bring out banks fromproblem of low profitability.Sets the limit of loan- The another role of central bank is to setting the limit of loan forbanks. As well as the banks should follow this limit of loan (Holzmann, Palmer andRobalino, 2012).So these are some common roles which are being played by central banks to the all banks ofcountry.
Issues in Financial Stability Assignment_3

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