1 ) INTRODUCTION
1 ) 1 . History of the Research:
The Banking Industry in the Philippines is among the (recorded) members to GDP under the Service Sector. Despite being one of the least contributing industries in the Philippines, its purpose is highly relevant in different market segments. Aside being a category underneath the Service Sector for GDP reporting, the Banking Sector is the most significant medium pertaining to Financial Intermediation in the Thailand.
Over the years, banking companies has been one of the common economical intermediaries that provides lending and deposit companies for people that are short in funds and people who have no place to use their particular excess funds on. In order to be more lucrative and improve the level of competition, Financial Liberalization was released in the banking industry where some financial regulations have been lifted so that banks could offer other financial services aside from the traditional Financial loans and Deposits. After the monetary liberalization arrived to the market, banking companies, particularly Universal and Business banks, possess found fresh sources of income apart from the traditional interest income. Types of these actions, as provided by researchandmarkets. com(2012), are Stock portfolio Management, Derivatives trading, Mobile/Internet Banking, etc. Non-Interest Profits, or fee-based income, originate from nontraditional activities/services provided by banking companies wherein these kinds of activities vary per financial institution in order to set up some sort of " competitive advantageвЂќ against their competition.
1 . 1 . 1 . Financial Activities Employed by Banking institutions in RP
Among the distinct classification of banks in the Philippines, it is Universal and Commercial banks' services that are to be availed of simply by most Filipinos since these kinds of banks cover Page you
the basic financial services that are not limited to a particular market just. Aside from the Classic Deposit-Loan actions that earn the usual Interest Income, banks have also engaged in investment and trading actions in order to gain even more profit that maintain the reserves in case a decrease in rate of interest occurs due to the changes in macroeconomic factors that also are really relatively correlated with the Interest Costs.
1 . 1 ) 2 .
Earnings Diversification: Minimizing Risk for Lender Capital?
Variation, in the field of Fund, is a approach used to decrease different kinds of risk
such as credit risk, and interest risk. This is used in managing asset portfolios to be able to minimize failures or even balance it with profitable property. In Banking, after the launch of Financial Liberalization, wherein deregulation of banking companies have been awarded, amount of competition among banks have become until it reached the point these banks was required to differentiate the items and solutions they offer aside from the traditional Financial loans and Deposit. This is where Non-Traditional Banking Activities come in. Non-Traditional Banking Activities are activities or solutions offered by banking companies at specific fee, for that reason generating noninterest Income. And now that banks have got a simultaneous generation interesting and noninterest Income, Income Diversification is carried out.
1 . 2 . Problem Assertion
What are the consequences of nontraditional Banking Activities upon Revenue Diversification of Universal and Commercial Banks inside the Philippines coming from 2008-2012?
1 ) 3. Aims
a. ) To identify different banking product or service offered in the Philippines which can be classified while Non-Traditional Financial Activities
m. ) To ascertain whether nontraditional Banking Activities have great or unfavorable effect/s in Revenue Diversity of Banking companies
c. ) To be able to recommend on which financial institutions services will be able to take advantage of the use of Non-Traditional Banking Activities/Non-Interest Profits.
1 . some. Hypothesis
H0: nontraditional Banking Activities (such as fee-based services and trading services) don't have any significant effect on banks' revenue variation which, in theory, should reduce risk of...
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