BFF2401 Commercial Banking and Finance Assessment Answers ...

Location: - Melbourne, Australia Study level: - Undergraduate Unit code: - BFF2401

Introduction The brief of the commercial banking and finance Bff2401 assessment is associated with investigating the issues and risks which is faced by majority of the financial institutions in Australia based on the global environment context. Here you get the commercial banking Bff2401 Assessment Answers. Some of the main topics of Commercial Banking and Finance within this course can be seen in terms of management of risk among banks in Australia and introducing the Australian banking environment. The course materials also relate to some of the other topics that as capital adequacy, investment management, liability management, pricing of a loan, interest rate risk, liquidity, capital and bank credit. The important learning objectives further include how the banks are able to achieve the capital target, application of the growth assessment model for predicting the bank’s future capital position and accessing the internal capital. In addition to this, the topics also relate to forecasting the external capital needs of the bank. The major sections of the Bff2401 assessment acknowledge the differences which exists between tier 1 bank capital in form of external sources and organic capital as the internal source. This further important to mention how the study has been conducive for outlining the planning process related to bank capital in form of not only selecting the target ratio but also achieving the same. Lastly, the course comprises of the various approaches related to measuring and defining the bank’s capital position. Main Body A commercial banking general is defined as any financial institution which has the power to proceed with various types of loan arrangements and performing functions related to checking account services and accepting deposits through the commercial banking. The individuals go to commercial banking for their different types of commercial banking activities. The main source of money made by commercial banking is depicted through earning interest in form of loans such as business loans, auto loans and mortgages. The difference between a commercial banking and finance institution can be seen in terms of commercial banking acting as a financial intermediary and middlemen between the borrowers and depositors for supplying of funds. On the other hand, financial institutions comprise of various categories of banks. These categories are evident in form of insurance companies, investment banks and investment funds. Along with this, the main difference between commercial banking and financial institutions can be also identified with how financial are not able to accept request of deposits and demand deposits account. The relevant advantages of commercial bank are seen with their product offerings, online banking service, electronic banking and various types of discounts. commercial banking are known for their low service charge pertaining to the customers and similar to the wholesale companies, commercial banking are able to offer various types of discounts such as zero fees for checking or opening savings account and granting credits to the customers with low interest rates. The significant limitations of financials services offered by the commercial banking can be depicted with imposition of restriction on the borrowing powers and following of rigid rules in terms of granting loans. There are also involves criticism for financial services in terms of fulfilling various formalities which are usually time-consuming nature. It is further worth noting how the financial institutions are also criticised for restricting the powers of company in terms of borrowing funds. Here you will get The important aspects of commercial banking and finance is associated with distinguishing the non-deposit and deposit sources of funds and deriving a relationship between funding cost and funding risk associated to withdrawal risk. The various concepts also include depicting the increasing importance of Australia’s response to liability management in the present times. In addition to this, the liability management under commercial banking and finance takes into account the necessary cost associated with raising the funds from wholesale sources and retail sources. It is further worth noting that liability management is also able to find out the differences which exists between marginal cost of funds, historical weighted average cost of funds and use a specific source of marginal cost of funds along with their use. The course module of the chosen topic further includes investigating the risk implications of the different choices of liabilities and strategic funding. The particular issues related to the strategic funding can be seen with the rationale for diversification and the factors to be considered for diversification. The liability management can be taken into account as the practice among the banks which is necessary for maintaining a balance between the liabilities and assets which have attained their maturity dates. Commercial banking and finance recognise the liabilities which is required to be maintained in terms of liquidity for the purpose of facilitating appropriate lending and ensuring maintenance of a healthy balance sheet. In terms of banking liability, we need to understand that there involve two main factors to be taken into account. This can be identified with consideration of borrowing amount of dollar and analysing the proportion of the dollar amount with the individual choices of liabilities. In addition to this, the overall difference among the equity capital and total assets helps the banks to determine the assets which would be appropriate for investment and finance these assets in the portfolio. The two main sources of funding in terms of financing that sets can be identified with equity financing and debt financing. Under the equity financing, the asset portfolios need to ensure that the company is having sufficient equity funding which is raised from the shareholders. On the other hand, debt funding refers to taking either short-term loan or long-term loan from bank in form of borrowing. The non-deposit liabilities arise from the different issues of instruments which are used in external market and interbank borrowing market. Additionally, the various types of trends pertaining to the bank liabilities is able to assess the liabilities absolute volume and workout on the ratio pertaining to the proportion of each liability. It is important to understand that in general there always has been a hesitation in relation to active investments in equity market. The liability management has become an important aspect of commercial banking and finance as people have increased access to cash flows as a result of deposits in open banks. Due to the presence of open banks, it has become more difficult for the banks to attract savings. This is mainly associated with superannuation policies where the proportion of individual income needs to be placed under the superannuation for effectively minimising the flow of funds. Conclusion Despite of the significant issues related to commercial banking in terms of liability management and restrictions on dividend payment, it is preferred over the financial institutions as there involves greater degree of systematic risks. In several instances, the rise of concept of managed funds leads to opening multiple bank accounts for various purposes. These needs are evident mainly due to less customer loyalty which takes place when people are ardent in switching banks and banks in turn are more driven towards having an incentive for innovating with the products for the purpose of retaining loyal customers.

12.5%