Financial Markets and Institutions

Financial Markets and Institutions

Commercial Banks

The banking sector of United States of America consists of various banks. The five major commercial banks in US are

Bank of America Corp.

JP Morgan Chase & Co

HSBC Bank

Citigroup

Goldman Sachs Group

These banks have around 96% of the exposures, and they are the main players in the commercial banking sector in United States. Other banks includes US Bank, Regions Bank, Branch Banking and Trust Company, US Bank, National City Bank, World Savings Banks, FSB, Countrywide Bank, PNC Bank, Keybank, ING Bank FSB, Merrill Lynch Bank USA, Sovereign Bank, Comerica Bank, Union Bank of California.

Transactions supported by the Commercial Banks in US and Global economies

The commercial banking offers a wide variety of liability products such as checking, saving a/c, deposit certificates and other deposit products. The banks provide asset products like mortgages, loans, credit cards. These products have their own rates and conditions. Almost all the commercial banks in US and throughout the world offer electronic banking facilities like ATM and internet banking. Commercial banks provides other miscellaneous services like financial consulting, corporate services, estate and trust services, safekeeping for valuable items and money transfer facilities.Banks also provide treasury and cash management facilities. They also provide the facility of issuing a letter of credit to its customers. The commercial banks offers debentures and under writing of shares

The banking sector plays a major role contributing to US economy and economies of the world. Commercial Bank plays a significant role in number of ways such as: provides proper utilization and consumption of resources through distribution, issuing capital to facilitate the production process, assisting the saving and investment process, facilitating the circulation of wealth which helps the economy to grow, providing ease in payment through various products, creating employment opportunities to billions around the world, ensuring ease in transfer of money through technology and plays a role of investor in securities issued by the government such as T-bills, saving and national certificates.

Factors affecting interest rate

The main factors that play a vital role in determining interest rates in a particular economy are as follows: such as level of inflation, money demand and supply, monetary policy, government intervention, economic condition of a country and other political factors.

One of the key factors that determine the interest rate is the central bank of the country. In today's world, the central bank takes the decision regarding the interest rate keeping in mind the economic and political scenario of the country. In US, the interest rates are influenced by The US Federal Reserve that gives loans to banks and financial institutions. For example, if markets fear that United States would default on debt, overseas investor would sell the holdings of their US bonds. It would result the US dollar to fall. The evidence from China showed that Chinese economy undervalued it's currency to build their Chinese exporters more competitive in the market.

Forecasting Interest Rates

Experts use different techniques to forecast interest rate. Economics and history is the most common technique to judge future ...