Question 1:How does government regulation affect a bank’s expansion in the global market? What are the possible strategies to deal with those constraints? (250 words) Question 2:Evaluate Minsheng’s...

Question 1: How does government regulation affect a bank’s expansion in the global
market? What are the possible strategies to deal with those constraints?
Solution
Traditionally banks have been regulated by their domestic or host countries. With the
advancement in technologies and communications, banks have expanded their operations
nationwide without a physical presence; these factors led government to regulate domestic
banks.
Banks are regulated because the regulations are perceived to benefit one or more target groups.
Government regulations play an important part in banking sector. Banks are subject to following
regulatory provisions:
1 Restriction on number of branches and new entry
2 Restriction on interest rate and other control on prices
3 Restriction on line of business and ownership linkage among financial institution
4 Restriction on the portfolio of asset
5 Compulsory Deposit Insurance
6 Capital Adequacy Requirement
7 Special rules concerning merger
8 Requirement to provide financial assistance to favored sector
These regulations have shifted from structural base to market oriented form, thus the banks are
facing worldwide completion from new entrants and other financial companies. The regulation
has facilitated the Banks by providing new opportunities to expand their operations. However
there are constraint’s which need attention
1. Due to regulatory reform, bank benefited from new opportunities offered by new and
improved financial services. But the effect of...