DEREGULATED BANKING INDUSTRY

UK's over reliance on a deregulated banking industry

UK's over reliance on a deregulated banking industry

UK's Over Reliance on Banking Industry

The banking industry in Britain has been able to contribute more than £ 70 billion to the economy. British banking sector, after the U.S. and Japan is the third largest in the world and is considered more important in terms of efficiency, flexibility and return on capital. It provides services to 95% of the population with about 3.5% of total workforce in Britain - more than one million banking employees. The decade ended in 2005, was three-fold increase in assets of € 5,526 billion, loans and deposits more than twice the € 3,284 billion and € 4984 respectively. The performance of the financial sector is growing three times the speed of the economy and reflects the increase in the share of GDP. Last year, banks and financial services contributed £ 70 billion of the national production of the country, equal to nearly 7 percent of GDP in the country 100% percent more than in 2003. United Kingdom is a major international centre for investment and private banking services, cross border banking for one fifth of global loans from international banks, one third of global foreign exchange transactions are handled from banks in London.

Deregulation Banking Industry

Government needs to take initiative such as offering regulated loans and borrowing to the customers. British banking industry has been passed through a radical change with the liberalization of the market due to deregulation and as a result of the Competition. The Building Societies Act of 1986 authorized the creation of partnerships to expand its financial services to include insurance and allowed building society to convert into banks. Life insurance companies moved into banking and banks dominate the mortgage and insurance. British banking sector recorded a rapid growth in the last ten years, and is predicted to grow further in the future. In an era of mergers and acquisitions, competition is fierce. There is a sharp decrease in the expected number of banks operating in Europe for more than two-thirds over the next 10 years. To compete, regulatory compliance and meet the needs of customers, banks must invest in technology, not only in the peripheral application deployment, but also in the modernization of core solutions.

Competition from banks and other financial intermediaries declining importance of commercial banking role traditionally played, the increase in off-balance sheet (off-balance-sheet) to mention the participation of new financial instruments are leading to rapid transformation and sectoral clustering. To a large extent many of the recent banking crises are the result of increased competition increasingly integrated markets worldwide, as well as the participation of non-bank intermediaries.

Financial Crises and Globalization

As noted in the introduction to banking crises have multiplied over the past 15 years accompanying international financial deregulation in both countries developed and in developing and transition countries. These occur when the active management of the balance problems facing currency compensation foreign (currency mismatching), concentration of credit in certain sectors ...