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DEVELOPMENT OF COMMERCIAL BANKS BRANCH NETWORK ‒ A CRITICAL EVALUATION
OF THEORY AND PRACTICE
This study focuses on commercial banking and the development of branch networks as an essential part of the banking system. At the centre of the analysis is the relationship between the expansion of the branch networks of commercial banks and the influence of the following four factors: the dynamics of the economic development cycle at global, ...
This study focuses on commercial banking and the development of branch networks as an essential part of the banking system. At the centre of the analysis is the relationship between the expansion of the branch networks of commercial banks and the influence of the following four factors: the dynamics of the economic development cycle at global, national and regional levels; the processes of consolidation in the banking system; the evolution of information technology and electronic banking and regulatory policy and restrictive measures including insolvency procedures that the central bank establishes in its supervisory capacity for the banking sector. The aim of this study is to offer a critical evaluation of the factors influencing the decision-making concerning the dynamics in the branch network of commercial banks, both at a sector level and in the context of the individual banks. The paper comprises four main parts: Firstly, a critical review of the regulatory system and contemporary scientific studies in the area of bank administration and branch network management, including the structure of decision-making factors in relation to expanding, maintaining or reducing the network of bank branches; Secondly, historical and empirical-applied analysis of the dynamics in the licensed banking institutions and their positioning on the competitive banking market in Bulgaria; and thirdly, analysis of the financial indicators for the banking system and the related trends in the development of the branch network of the commercial banks in Bulgaria and their staffing. As a result of the study, it has been confirmed by the empirical data for the Bulgarian banking market that after 1989 the dynamics in the branch network was originally due to the dynamics in the creation and merger of banking institutions. During the period of EU membership, this process has been based mainly on the key factors developed with the priority of the regional demand and supply of banking services. About the two leading banking institutions, in terms of bank staff numbers, number of branches and personnel per branch for the two leading Bulgarian banks, the analysis has shown the following results: 3049 people, employed in 173 branches with a 17.6 average number of employees per bank branch for Unicredit Bulbank (data relating central management as well) and respectively, in the system of DSK Bank - 4115 people with an
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INFLUENCE OF THE LEGAL FRAMEWORK
IN DETERMINING THE REQUIRED AMOUNT
OF TECHNICAL RESERVES FOR MOTOR THIRD PARTY LIABILITY INSURANCE
The problems arising from the recent global financial and economic crisis have led to a rethinking of many texts both in local laws and at Community level. New rules and regulations have gradually been introduced concerning all economic agents operating within the European Union. The introduction of these regulations in the field of insurance is ...
The problems arising from the recent global financial and economic crisis have led to a rethinking of many texts both in local laws and at Community level. New rules and regulations have gradually been introduced concerning all economic agents operating within the European Union. The introduction of these regulations in the field of insurance is associated with the adoption of Solvency II Directive. The implementation of the Directive in the Bulgarian legislation was realized with the adoption of a new Insurance Code, effective as of 1 January 2016 and Financial Supervision Commission’s Ordinance No 53 of 19 January 2017, which determines the order and method of allocation of technical reserves by the insurers working on the Bulgarian insurance market.
The study assesses the impact of the regulatory framework on the technical reserves of insurance companies offering Motor Third Party Liability Insurance. It outlines the problems that insurers have to deal with and the effect that the methods, used for calculating the required amount of technical reserves, have on the insurance company’s balance sheet.
The study has shown that there are differences in the methodologies described in the Solvency II Directive and Ordinance No 53 of Financial Supervision Commission. They concern the valuation of insurance companies’ assets and liabilities, the recognition of cash flows and the treatment of insurance income and expenses. Therefore, legislative changes are needed to synchronize the requirements of Bulgarian legislation with the European Directive Solvency II, with a view to optimizing the amount of technical reserves for Motor Third Party Liability Insurance.
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CLASSIFICATION, EVALUATION
AND ACCOUNTING POSSIBILITIES
FOR DERIVATIVE FINANCIAL INSTRUMENTS
The undeniable interest of economic theory and practice towards financial derivatives makes them a current subject of analysis. The existence of derivatives raises the logical question about their purpose. If an investor participates in the distribution of a company’s profits by holding its shares, why do they apply another instrument that is ...
The undeniable interest of economic theory and practice towards financial derivatives makes them a current subject of analysis. The existence of derivatives raises the logical question about their purpose. If an investor participates in the distribution of a company’s profits by holding its shares, why do they apply another instrument that is related to owner’s equity? The derivative markets create favorable opportunities by improving the efficiency of the underlying assets markets. Derivatives have lower transaction costs compared to other transactions with basic instruments on the spot market, they are more liquid and the risk can be transferred into a more effective, simple and inexpensive way. Proof for the significance of derivative instruments is also the EU-accepted IFRS 9 Financial Instruments. Therefore, it is important that the management of every organization is aware of the regulatory framework for financial instruments, as well as the effects of each transaction with financial instrument.
The main purpose of the study is to define a classification of derivative instruments and to mark key points in their accounting. The specific objectives that have to be solved are to highlight the alternatives for classifying derivatives and to focus on their immediate current accounting. The thesis is that the adequate classification and evaluation of these instruments are important factors for their correct accounting. The main conclusion is that proper classification of derivatives has a practical significance because there has to be determined whether the instrument has a value at the beginning, which has a timely accounting impact. Their internal and time values have a significant role as well, because in the changes they must be clearly distinguished from the change in the fair value of the derivative itself.
