Shadow Banking - Assignment Example

The banking system has played an important role in home mortgages due to their role that has grown in turn in home mortgages to securities. The chain involved in securitization starts with the origination of mortgages and sold to one or more financial entities before they end up to mortgage loans that are sold to investors.  The value of security obtain is related to the value of mortgage loans that are used to back up security paid with interest. The backed-up security is paid in interest and those that own homes pay the mortgage loans. The process and stages that shadow banking is involved in the lead to the generation of finance. This makes the process essential in the generation of finances.

1. Comparison of this role of raising funds for mortgages to those of conventional banks

There are differences and similarities that occur in the banks.  In similarity, both the banks are seen to perform credit intermediation. However, there are varied differences that occur in the banks. In conventional banks, there is occurrence under the same roof while in shadow banking, giving out of credits occurs through a chain of entities. This makes operations in shadow banking to be more complex than in conventional banks.

            Another difference that can be noted between the two banks is the regulations that are involved in acquiring credit. Conventional banks are strictly regulated having access to central bank funding and deposit insurance schemes. In shadow banks, there is little or no regulation since they are not able to access funding from central banks. Shadow banking is also based on wholesale funding. The difference that the banks have on the source of funding also is brought out in conventional banking.

Conventional banks give out loans and indicate them on their balance sheets until the loans mature while in shadow banks, the loans are sold and converted to security.

There can be a diversion of activities from the regulated financial segment to the unregulated in shadow banks while in conventional banks, there is no diversion of activities that can be done.

Completion of table

Banking

Universal banks 

Bank stubs

Banking terms

Separation of investment and commercial banking

Payment systems

Investment banking

African, Asian, European, and united states bank stubs

Cooperative banking

Banking by country

Bank

Banking act

Template bank stubs

List of largest banks

Credit card terminologies

Commissions on banking

List of different terminologies used in the banking system

Different banking commissions

Additional information

Universal banking refers to the condition in which are allowed to give a variety of services to their customers. The banks are not just restricted to the provision of services related to loans and savings but also involved in other services such as investments.

In the baking category, there is banking which considers different aspects. The system is different for each country. The sector considers assets, bankers, bank infrastructure, loans, ethical banking, banking institutes, and baking technology. There is consideration of percentage rates, bank numbers, and bank accounts.

In baking terms, there are definitions of terms through which the banks are to operate. There re-credit term terminologies in which the use of credit cards is brought out, payment services and terms of payment in the banks, money transfer terms, obtaining credits from banks, and quality of assets as considered by banks.