Implications of change management in public administration

Finances - Accounting
have sufficient own resources to cover any unexpected losses from credit risk; in
addition lack the toxic assets of banks operating in Romania leads to avoid
interventions funded with public money.
Based on the results of the analysis of Romanian credit institutions, we consider
that the increasing involvement of banks in our country in transactions in securities,
both money market and capital market, is not only necessary but also possible, creating
synergy effects the following advantages:
in terms of efficient allocation of resources, banks have the ability to lower
intermediation costs and improve capital allocation. Previously, banks reduce
information costs (since there are several debtors, the lower monitoring costs) and
resolve the benefit of free information, because loans are not traded, so banks have an
incentive to acquire information. Subsequently, direct monitor investments made. On
the other hand, banks can use information not available to others in order to extract
higher profits from companies;
in terms of risk management, banks consider a linearized inter-temporal risk
(because investment banks are active in lower risk, while markets investors adjust their
portfolios to achieve the higher yields) and perform the management of liquidity risk 2 .
On the other hand, the orientation of banks to have projects less risky, makes that
financing of innovative ideas (which are more risky) to have suffered 3 .
Also, involving of banks in transactions with securities should not be seen at
small (only direct funding for the placement of shares and bonds), but large (extended),
respectively for an efficient risk management, including as a source of increasing
profits.
Thus, given the structural changes occurring in financial markets and different
concepts about financial instruments, we believe that banking features (efficient
allocation of financial resources in the economy, creating and offering the market for
financial instruments for risk management, efficient mechanism payments, including
the securities clearing and settlement) warrant inclusion in the scope of titles, alongside
the classic among other things, like derivatives.
An argument in support of this idea is a financial innovation process (e.g.
conversion of a group which is securitizing assets in illiquid financial instruments
traded on the market and credit risk segmentation and transfer risk class), which
allowed banks to allocate assets more efficiently structured assets according to risk
categories to those who previously had no access to such a wide range of placement
availability. Another argument in favor of extending the scope of titles is to consider the
development of balance sheet and off-balance sheet of banks evolutions. Items in the
second category know most consistent dynamic in the business and bring modern
banking revenues increasingly significant.
Placing and bank financing through debt securities and equity securities
The structure of financial intermediation by banks has changed, the role of
securities in the balance of these institutions is increasing. On the asset side, until
2 Diamond, D., Dybvig, P. - “Bank Runs, Deposit Insurance, and Liquidity”, Journal of Political
Economy 91 (3), 1983, pag. 401-419
3 Weinstein, D., Yafeh, Y. - “On the Costs of a Bank-Centered Financial System: Evidence from
the Changing Main Bank Relations in Japan”, Journal of Financial Economics, 1998, pag. 532-
635
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