Question 1

A change in economic environment will stimulate financial institutions to search for financial innovations. Change in demand conditions, especially in interest-rate risk, change in supply conditions, especially improvement in information technology, and the desire to avoid costly regulations have been major driving force behind financial innovations. International banking has benefited from these changes and therefore has hurt profitability in banks traditional lines of business and has led to decline in traditional banking.

1. What are the factors that contributed to the growth of international banking over the past few decades? Explain.
2. How financial innovations influenced the growth of international banking? Can you indicate some of the financial innovations that contributed to the profitability of international banking?
3. How the rise of international banking affected the traditional banking? Explain.

Question 2

You are working as a top manager of a Chinese bank and you decided to open branch in a foreign country, say India. You are given the task of developing and implementing well-defined procedures for some of the major risks that you may encounter in a foreign country. Can you explain some of the challenges facing international banks going global? What kind of policies you as a manager are going to consider before operating in foreign country.

Question 3

1. one of the most significant development in international banking in the post Second World War was the rise of eurocurrency markets. Can you explain how these new markets have contributed to growth of international banking?
2. Over the past several decades, the world has witnessed number of banking systems crisis such as in Argentina, Mexico, Brazil, and the Asian crisis of 1997-98. How these regional banking crises affected the operation of international banking? Explain.