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Banking infrastructure

Category: Concept of the Bank and the Banking System

Banks as elements of the banking system can develop successfully only in conjunction with its other elements, especially the banking infrastructure. Under the banking infrastructure is a set of elements, which provides vital functions of banks. To distinguish between two sets of banking infrastructure: internal and external. The first ensures the stability of the bank from the inside, the second — in its interaction with the environment.

The elements of internal infrastructure include:

— legislation defining the status of credit institutions, the list of running their operations;

-internal rules of the transaction, ensuring the implementation of laws and protect the interests of depositors, the bank’s clients, its own interests, in general, methodological support;

— construction accounting, reporting, analytical framework, a computer data processing, management of the bank on the basis of modern communication systems;

— management structure by the bank.

Starting the beginning of the bank’s activities are various kinds of legal norms and instruments (the bank’s charter, the resolution of the commission of certain operations, the prohibition to engage in these or other types of services, etc.). In addition to these legal norms banks form their own methodological framework. In the absence of a number of regulations on the order of the commission of certain transactions, commercial banks themselves, a rule of conduct. Of course, this complicates the work of credit institutions, may cause errors impede protection of the interests of their clients to achieve their own goals.

It is extremely important to establish efficient banks are the organization of labor, high-quality reporting on the results of their activities. An indispensable condition for reliable operation of the bank as a venture company is also forming an analytical framework, involving the preparation of analytical tables, a certain content, data collection, data processing, its use in the management of credit institutions on the basis of modern communication systems.

An important element of the domestic banking infrastructure is the management structure by the bank. Bank as an economic institution should have a set number of units required to meet the objectives of the bank, its functional purpose. In addition to senior management (Board, Board of Directors, etc.) in the bank, as a rule, are departments, divisions, sectors, providing management of liquidity and profitability of operations, planning, banking in general and individual operations. At the core of banking management apparatus includes a unit organizes the banking and accounting. To an external unit banking infrastructure include:

— information management;

— scientific support;

— Staffing;

— legislative base.

Information provision is an important integral attribute of a market economy. It is necessary to both banks and their customers. Banks, operating in a competitive environment, collect information about the development of the economy as a whole, individual branches and sub-groups of enterprises. Based on the analysis of trends in market development banks adjust their monetary policy, restricting or expanding their investments, reallocate capital in accordance with the state of supply and demand. Necessary information about the macroeconomic relationships, usually found in statistical yearbooks, and numerous references, special operational publications, newsletters, published including central banks.

In the course of their activities, banks are actively using data on the economy of enterprises, the development of their product and financial stability. In addition to balance, and other forms of enterprise reporting banks collect information about the activities of their customers in the periodical press, use the services of specialized agencies with confidential information about the enterprise as a whole and its leaders. In some countries, banks are able to apply to specific companies, analyzing the economy of enterprises, to obtain from them the necessary information. Card file of clients in a number of cases being central banks, allowing commercial banks to promptly evaluate the company, requesting the loan. The central banks of some countries in the practice of sending unsolicited commercial banks of data on companies that violate the payment discipline, delaying the repayment of bank loans.

Market information may relate not only to commercial banks’ clients, but also themselves. Special credit rating agencies occasionally publish information on the reliability of credit institutions. This information is used not only banks in the relationship with each other, but also businesses, individuals wishing to choose a reliable bank.

Under market conditions, banks are a significant portion of its resources are directed to the development of scientific software. Virtually every commercial bank analysts are working, studying the market. Large banks, interbank association formed a special scientific institutions (think tanks, research institutes). Market analysis, development of new products, improvement of labor organization, the mechanism of banking operations allow banks to survive the competition, to avoid errors, improve the overall reliability and efficiency of their work.

Substantial block of banking infrastructure in favor staffing. Frames, as they say, are everything. Of professional specialists depends on the effectiveness of the banking business. Retraining, skills are concentrated in a variety of special commercial schools, courses, and training centers established in major banks.

In modern conditions, when the economic risks in banking activities are enhanced, exacerbated by the need for economic personnel with high professional expertise in banking, bank management and its branches. In commercial banks often employs people who know nothing about modern banking technology. This hampers the development of the banking system, leads to errors in the formation of the loan portfolio, losses in the commission of certain operations.

A special unit of the banking infrastructure is the banking legislation. As well as other units, it has a significant impact on both the development of the banking system and its relationship with businesses, organizations and communities.

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