A Bank May Establish a Multinational Operation for the Reason

question 68

Multiple Choice

A bank may establish a multinational operation for the reason of wholesale defensive strategy.The underlying rationale being that

• A)banks follow their multinational customers abroad to prevent the erosion of their clientele to foreign banks seeking to service the multinational's foreign subsidiaries.
• B)multinational banking operations help a bank prevent the erosion of its traveler's check,tourist,and foreign business markets from foreign bank competition.
• C)by maintaining foreign branches and foreign currency balances,banks may reduce transaction costs and foreign exchange risk on currency conversion if government controls can be circumvented.
• D)multinational banks are often not subject to the same regulations as domestic banks.There may be reduced need to publish adequate financial information,lack of required deposit insurance and reserve requirements on foreign currency deposits,and the absence of territorial restrictions.

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Definitions:

Calendar Year

A period of time that starts on January 1 and ends on December 31, used for accounting and official purposes.

Debit Part

The left side of an accounting entry, which increases assets and expenses and decreases liabilities and equity.

Journal Entry

A recording of a business transaction in an accounting journal, indicating the financial effects of the transaction.

Posting Reference Column

A column in journals or ledgers used to record page numbers or account numbers, facilitating the tracking of transactions.