Bank Financial System Essay
CHAPTER ONE: INTRODUCTION AND BACKGROUND TO THE STUDY
1. Introduction
This chapter is an introduction of this research study in its entirety, where a short background to the study regarding financial liberalization is given. It gives the statement of the problem and the reason for conducting this study. It furthermore gives the main objectives and the questions that this study is focused on. Finally, it gives the limitations of the study, the framework of the proposal and a whole summary of this chapter.
2. Background of the study
Financial systems have a major contribution to economic growth and development that can only be reached if the total financial system is subjected to suitable financial guidelines and modifications (Hanson et. al,
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However, in terms of banks ownership even if the then existing state owned banks have been re-organized to operate based on the market-oriented policy framework and the new private owned banks are allowed to participate in the country’s financial sector and the ownership diversification that was expected from liberalization has not yet been fully achieved. This further can be explained by the ban on foreign banks to operate in the country from the time of nationalization onwards (since 1975) as well as the restriction of private banks not to participate in the ownership of government banks. On the other hand, despite the series of changes and liberalization measures undertaken, currently the sector performance in terms of deposits, loans, capital, total asset and profitability has been concentrated towards the big government bank namely, Banco the Poupanca e Credito (BPC). Although different market structure measures demonstrated a gradual trend of its dominance, the industry persisted with supremacy of a government owned bank
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