Comparative studies on the cost of funds in various leading financial centres

• Main Authors: Chooi, Chee Seng, Ng, Carolyn Wai Mun, Phan, Siew Leong
• Other Authors: Tan Khee Giap
• Format: Final Year Project
• Language: English
• Published: 2015
• Subjects: DRNTU::Business::Finance
• Online Access: http://hdl.handle.net/10356/63541
• Institution: Nanyang Technological University

This academic project attempts to examine the costing of funds for banks in developed financial centres such as those of the US, UK, Japan and Singapore. The thrust of this study is on the reserve requirements of the four selected financial centres and how these requirements affect the effective cost of funding for banks. In particular we have conducted a thorough review of the Singapore's reserve requirement. A comparison is also being made between the various financial centres with regard to the reserve ratios, costs and risks, roles of central banks, reserve accounting techniques, etc. Having examined the foreign and local market conditions, the study discusses further the local interbank money market and the problems faced by the local money market desk in their costing of funds computation. Field trips are conducted to determine whether there is a methodological difference between practitioners in the money market and those in the academia in their approach to the costing of funds in Singapore. The effectiveness of the macroeconomic policy of the MAS and the interest-elasticity of investment in the local context are also examined. This is complemented by a discussion on the relative profitability between the local and foreign banks in Singapore with special emphasis being placed on their resilience in adapting to the reserve requirement.