Recently, general banking has been growing its reputation in Indonesia. Mandiri Bank, as an example, has brought strategy to become Indonesia's common bank; that bank has also initiated to produce a economic risk program in terms of appearing financial efficiency and raising shareholder value. In Germany, and many developed nations in Europe, common banks have initiated their operations since nineteen century. There is rising evidence that in those places, universal banks have taken a significant portion in the development of real sectors and the financial system. In these nations, the rising variety of general banking practices are actually supported by the regulation of main of bank.
Despite, in The United Claims, they're strict to regulate common banks by preventing commercial banks from engaging in securities and stock areas practices. They argued that the exercise of general banking could be dangerous for the economic system. ((Boyd et.al, 1998) cited in Cheang, 2004) The "risk" might be the main element reason why the central bank of The U.S is concerned about the general banking system. Because, if the main of bank permitted banks to regulate their function to be common banks, the partnership among, banks, financial and stock areas will be closer. Consequently, this might give an uncertainty to the banks situation and performance. As an example, if there have been a problem in stock industry, banks would get problems in their economic positions. Hence, they'd are generally insolvent.In addition general banks would also threaten industry reveal of different specific institutions, since more clients would choose common banks offering more solution for their investment. Ergo, more specialized institutions are probably be destroyed in the U.S economic industry.
One majoring component, that will be triggering a bank to be common bank, is to increase the revenue by enlarging their market share. According to João A. C. Santos (1998) general bank it self can be defined while the economic institution, which enlarges their company selection with regards to providing a variety of economic services and products and solutions in one site. Thus, by functioning general banking, banks might get a greater opportunity to expand to a different financial place, such as for example : economic securities, insurance, hedge resources and etc.
Although the tendency of banks has helped to universal banks, it is without question true that common banks would also face more dangers just because a wide selection of financial solutions is strongly connected with increasing risks and escalating checking costs. They are the important issues why banks have to apply more improve technology in terms of economic risk management. Furthermore, the practices of common banks might cause significant risks to economy's cost system. Because, the operation of common banks links carefully to the financial and stock markets which can be really fluctuate in a quick term.
To get in the limited opposition among financial institutions, banks have to change their maneuver to lead in the market. Universal bank can function as smart selection for the financial institution supervisor, since they are able to attract more consumers with a wide selection of services. Moreover, by adjusting their operation to the general banking process, banks could get advantages of the performance and economies of scale.In order to comprehend concerning the common banking techniques, this report could study the exceptional matters, which linked to the risks and advantages in a common bank. Furthermore, that report would also concentration the complete influence of this institution to the economic process and the economy as a whole.