Recently, universal banking has been growing its reputation in Indonesia. Mandiri Bank, like, has taken technique to become Indonesia's universal bank; this bank in addition has caused to develop an integral financial risk system when it comes to sounding economic performance and raising shareholder value. In Germany, and most produced nations in Europe, general banks have initiated their operations since nineteen century. There's mounting evidence that in those places, general banks have taken an essential portion in the progress of real areas and the economic system. In those countries, the growing numbers of general banking practices are really supported by the regulation of key of bank.
Despite, in The United Claims, they're rigid to control general banks by preventing professional banks from doing securities and inventory areas practices. They fought that the exercise of universal banking may be hazardous for the economic system. ((Boyd et.al, 1998) reported in Cheang, 2004) The "risk" could be the key reason the main bank of The U.S is worried about the general banking system. Because, if the key of bank permitted banks to regulate their operation to be universal banks, the connection among, banks, economic and stock areas will be closer. Therefore, this could provide an uncertainty to the banks issue and performance. Like, if there have been a tragedy in inventory industry, banks might get problems inside their financial positions. Therefore, they would are generally insolvent.In supplement universal banks could also threaten industry share of other specific institutions, because more consumers could choose general banks that provide more alternative for their investment. Ergo, more particular institutions are probably be destroyed in the U.S economic industry.
One majoring component, which is causing a bank to be common bank, is to boost revenue by increasing their market share. Based on Joãe AC Santos (1998) universal bank itself can be identified as the economic institution, which extends its service range in terms of offering many different economic services and products and services in one single site. Thus, by operating universal banking, banks could get a greater chance to expand to another economic region, such as: economic securities, insurance, hedge funds and etc.
Even though the trend of banks has recently tended to common banks, it is without a doubt true that universal banks might also experience further dangers must be wide range of economic services is strongly associated with raising dangers and escalating monitoring costs. These are the key concerns why banks have to implement more improve technology in terms of economic risk management. Furthermore, the techniques of general banks might cause significant risks to economy's payment system. Since, the operation of universal banks connects directly to the economic and inventory markets which are really alter in a short term.
To get in the tight competition among economic institutions, banks have to improve their control to lead in the market. General bank could be the intelligent choice for the bank manager, since they could attract more clients with a wide selection of services. More over, by transforming their operation to the common banking process, banks could get advantages from the effectiveness and economies of scale.In obtain to understand about the common banking practices, this report might study the exclusive matters, which related to the risks and advantages in a universal bank. Moreover, that paper might also emphasis the complete influence of this institution to the economic program and the economy as a whole.