Banking ethics; Pawn shops and 18th century animators

Every Loan Creates a Deposit. There is a bank saying. A loan from a bank is a return to a bank as a deposit. Why? People do not want to hold a big bag of banknotes for long because of five enemies. So, every time the bank loan increases, the banknotes go out of the bank, but the creative idea is that the bank returns the deposit. This is to make it clear that banks have a responsibility to repay loans for every deposit.

The principle of commercial banks is that, like private companies, they must pursue other purposes besides profit. This is the opposite of profitability. The Liquidity Principle is to be followed. There is business ethics in business as well as banking.

Banks must work for profit and adhere to the Liquidity Principle. In other words, to get into the hands of the bank lender quickly; These borrowers transfer money from one hand to another. The bigger the lending chain, the better. It is going to get faster and faster. The whole process of refinancing every loan is called the Liquidity Principle. Therefore, banks will accept more deposits. On the other hand, if you do not increase your credit, you are violating the Liquidity Principle.

Increase deposits and increase capital. Increasing lending also needs to be normalized. There are various incentives to increase citizens’ deposits, and loans are provided to people close to the bank. It is also unethical to lend to the banking community alone. It is not known whether Myanmar’s banks adhere to this code of conduct.

Let’s take another look at the ethical and procedural aspects. Myanmar’s commercial banks have adopted 18th-century practices such as accepting deposits and withdrawing money. Issuing deposits; Cash exchange; Bank account transfer; Purchasing government treasury bonds; Money transfer It has not yet come up with very simple procedures, such as short-term loans. If you withdraw money from your account, you have to pay the withdrawal fee. If you make a deposit, you have to pay a deposit fee.

If you transfer money, you have to pay the transfer fee. Banks are a Myanmar banking system that is creating profits for very simple jobs. If you are borrowing, you can buy a solid house. Land Living on interest-bearing mortgages on solid conditions, such as buildings, is not a bank job. It is a universal fact that you can not borrow money without a mortgage. What is close to you? It is also unethical to borrow money in the same direction as the banking community.

Banks are too focused on profit rather than liquidity. Due to the overcrowding of loans close to the banking community, Once upon a time, when the housing market was booming, I borrowed on non-performing loans. Myanmar’s financial world has not yet recovered from the kyat crisis. This is not the only weakness of the bank. Policy instability; Cash-centered miscarriages are a major cause of the disappearance of trust relationships, such as weak economic institutions.

Respect for liquidity rather than profitability The deposit can be withdrawn at any time. Creating loan products to keep the market afloat; This is to support economic growth. Ease of money depends on consumption, Investment; It is the process that pushes the collection process.

Banks need to be profitable. To create liquidity; The central bank often decides on policy instruments to limit the cash-to-cash ratio of deposits. In the UK, only 6% of deposits are deposited in the central bank.

Banks now have a fixed deposit ratio, but the former Central Bank of Myanmar has set aside 16 percent for current accounts and six percent for deferred deposits. Low proportion; The increase is related to credit creation; It also drives deposit creation and liquidity.

Let’s take a look at how credit creative shapes the growth process, according to the theory that every loan is a deposit. U Ba deposited 1,000 lakhs at A Bank and kept 20% of the cash. Let’s see what happens to the balance.

U Ba has 1,000 lakhs in A Bank. The bank lent U Mya the remaining 800 kyat, which he owed 200 kyats in cash to the central bank. U Mya returned it to B Bank. The bank has placed 160 at the central bank

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