Industry Analysis: Banking Essay example -- Essays Papers

Industry Analysis vernacularing The banking industry has get under increasing pessimism of late because of rising short and long-term provoke rates. The banking industrys market capitalization made a substantial decline. Most investors atomic number 18 concerned with whether the industry can sustain continued profitability as a result of these factors.Banks have responded in recent years to these problems by diversifying away from interest sensitive products and services. But interest rates argon the fundamental aspect of any pecuniary services. Therefore, I believe the financial services industry will be deeply affected by rising interest rates. Banks have experienced good business factors everywhere the past two years. Interest rates were low, credit quality was good, and pompousness was low. These factors are usually predictive of the types of earnings banks should report. But good propagation cant continue because interest rate hikes cause reduced lending activity , discredited credit quality, and reduced values of bond portfolios.Porters Five Forces Analysis1. disceptation among competing sellers The banking industry is continuing to restructure and position itself for our changing economy as a result, many mega-mergers have occurred in recent years. Citicorp and Travelers Insurance concur to merge in April 1998 at a value of $70 billion. Bank of America and Nations Bank also agreed to merge shortly later on which became the largest bank in the United States. Bank merg...