The Behavior of Banks and Related Financial Institutions
Document Type:Research Paper
Also an insight into the relevance of the provision of financial incentives to the loaning officers is also given. The relationship between a rise in the number of approvals for loans to the provision is also given. There is also an insight into the reason for the increased unethical practices from the banking institutions due to the thought that the banks are too big to collapse. Nevertheless the banking sector in the contemporary society is unique as compared to its performance in the previous decades. Introduction The sole intention of any business entity is to increase its profit margins. 456) implore that banks in the contemporary society do not assume a client’s needs rather they focus on an in-depth perspective into understanding their needs.
Some of the strategies used by the banks include asking of questions to cater for the clarification of the needs of the clientele. In addition it is also essential to point out that a consultative approach whereby the banking members of staff relate well with the clients results in an increased and personal understanding of the customer’s needs. Banks Leveraging Accounts and Creating Value for Consumers In this respect it is also essential to point out that the other strategy that is often used by banking institutions involves leveraging on the accounts that the clients currently own. For instance customers with an existing account can be provided with services that they did not think they required for their accounts rather than focusing on new customers.
E & Young, 2015, p. Nevertheless, Agarwal and Ben-David (2018, p. 4) are of the school of thought that the personnel in charge of loan administration had their salaries as fixed for a long duration before the 21st century. Nevertheless the 21st century is characterized by the creation of incentives that act as motivating factors for the individuals that are associated with the responsibility of making lending decisions. One of the strategies that is often used is the provision of a different set of benefits for the loaning officers when they recommend and successfully convince a client to take up a particular loan. The Relevance of Banks Increased Misbehavior It is intriguing to point out that misbehavior among banks in the contemporary society increased following the rationale that the financial institutions are too large to collapse.
In this context the Commonwealth of Australia (2018, p. 129) shows that large banking institutions hide under fissures in the law, thus making them immune from repercussions of their misbehavior. For example the Wharton University of Pennsylvania (2015) noted that major banking organizations pleaded guilty in the court of law for unethical practices associated with manipulation of currency as well as the exchange rates. They therefore are still in operation despite their actions hence increasing the cases associated with misconduct. National Bureau of Economic Research. Banks, G. C. , Rogelberg, S. G. and Guettler, A. Financial incentives and loan officer behavior: Multitasking and allocation of effort under an incomplete contract. Common Wealth of Australia (2018). Interim Report Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
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