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The Drivers and Barriers Affecting the Development of the Financial Services Industry - Term Paper Example

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The author states that the financial services industry is driven by numerous drivers as much as it is faced by many barriers hindering its development. So, this paper seeks to analyze the various drivers and barriers affecting the development of the financial services industry…
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The Drivers and Barriers Affecting the Development of the Financial Services Industry
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Download file to see previous pages The financial industry is probably one of the most important economic sectors in present-day societies. Thus, in the extremely advanced service economies such as the US-the financial industry employs more personnel than the apparel, computers, automobiles, steel and pharmaceutical industries combined. The financial services industry, therefore, accounts for nearly 5% of the GDP in the US alone and almost 5.5 percent in Germany, 3.5 percent in Italy, with comparable statistics found in other European Union economies having exceptionally advanced financial intermediaries (Berges et al, 2014).

Similarly in other regions of the world such as Japan, the financial industry accounts for nearly 9 percent of the nation’s GDP with Singapore financial industry commanding an impressive 6.5 percent of the total GDP of the country. On the other hand, smaller economies-particularly those aspiring to have a considerable presence internationally via offshore banking techniques-the financial industry may even be more important. The Swiss financial industry accounts for more than 9 percent of the nation’s GDP. In addition, Cyprus-a tiny Mediterranean country providing off-shore financial services to Russia as well as Eastern European nations has over 18 percent of her GDP emanating from business and financial services, with these sectors keeping nearly 10 percent of the population employed. In Israel, 18 percent of the country’s GDP is because of the combined business and financial service industries, which keep 10 percent of the population gainfully employed (Berges et al, 2014).

The financial services sector especially the banking industry is quite sensitive and has over the years been facing numerous serious challenges. Thus technological innovations, rising taxes and stricter regulations all lead to doubting the traditional business model. Consequently, the shifting of wealth towards emerging markets provides limitless opportunities. The following are some of the drivers of the financial services industry; The well-informed bank customer-There is going to be a profound change in business and consumer profiles over the coming years.     ...Download file to see next pagesRead More
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