value creation and structure of financial services industry n.
Download
Skip this Video
Loading SlideShow in 5 Seconds..
Value Creation and Structure of Financial Services Industry PowerPoint Presentation
Download Presentation
Value Creation and Structure of Financial Services Industry

Loading in 2 Seconds...

play fullscreen
1 / 22

Value Creation and Structure of Financial Services Industry - PowerPoint PPT Presentation


  • 335 Views
  • Uploaded on

Value Creation and Structure of Financial Services Industry. Week 1. Target market for this course. Managers of financial service firms Investment bankers doing deals Strategic planners and researchers Consultants and other business services Users of financial services.

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'Value Creation and Structure of Financial Services Industry' - libitha


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
target market for this course
Target market for this course
  • Managers of financial service firms
  • Investment bankers doing deals
  • Strategic planners and researchers
  • Consultants and other business services
  • Users of financial services
course goals and requirements
Course goals and requirements
  • Readings
  • Class participation
  • Case analysis and discussion
  • Group project
  • Individual parts of project
  • Current periodicals
financial service firms
Financial service firms
  • Mergers and acquisitions
    • Banks and thrifts consolidate
      • e.g. Citibank and CalFed
    • Financial firms form conglomerates
      • Citigroup out of Travellers and Citicorp
    • Multinational financial firms
      • Aegon (Holland) acquires Transamerica
  • International events
    • Chile, South Korea, Poland
driving forces
Driving forces
  • Technology
    • Cheap telephony/satellites
      • Telephone service centers
    • Cheap computing
      • Internet
  • Regulation/taxation
    • Roth accounts, 401Ks
    • Bank holding company/Glass-Steagall
  • Demographics
key questions for management
Key questions for management
  • Where are synergies, revenues or costs?
    • Economies of scale
    • Economies of scope
    • Cross-selling
    • Cost of inputs
  • More important: What are we good at?
  • Requires a rigorous framework for analysis
approach taken in this course
Approach taken in this course
  • Financial economics
  • Hands-on applications
  • Healthy skepticism
  • Examine the basics
  • Ask simple questions
objective function for financial service firms
Objective function for financial service firms
  • Maximize shareholders’ wealth
  • Stock-owned corporations
    • Commercial banks
    • Diversified financials
  • Mutual organizations
    • Thrifts
    • Insurance
  • Problem with mutuals
value added and value creation
Value Added and Value Creation
  • Value added subtracts all costs of inputs from all revenues
  • Value added must cover any value added by the firm from use of labor and capital, and used to cover payments to tax authorities
  • In many countries, value added used as basis for taxes (e.g European Union)
value creation in financial services
Value Creation inFinancial Services
  • Financial services
  • Activities required to provide services
  • Allocate resources to highest returns
  • Determinants of returns:
financial services
Financial Services
  • Credit (lending)
  • Securities
  • Transaction processing (payments)
  • Insurance
  • Asset management
  • Information
activities to provide services
Activities to Provide Services
  • Setting Terms/Pricing
  • Communicating/Marketing
  • Producing/Delivering
  • Controlling/Monitoring
  • Funding/Investing
  • Risk Bearing/Risk Shifting
value creation matrix
Value Creation Matrix
  • Columns = Services
  • Rows = Activities
  • Strategies = Concentration of activities
  • How to choose best strategies?
traditional financial services
Traditional Financial Services
  • Result of
    • Business specialization
    • Taxation
    • Regulation
  • Main types of firm
    • Deposit-taking
    • Insurance type
    • Investment companies
    • Securities firms
the financial services industry
The Financial Services Industry
  • Basic types of institutions
    • Deposit-taking
    • Insurance type
    • Asset management
    • Securities
  • Representation in Flow of Funds
  • Institutional investors
flow of funds
Flow of Funds
  • Strategic overview
  • Primary sectors
    • Total wealth
    • Nature of real wealth
    • Role of financial intermediation
  • Major financial service sectors
  • Tracing changes in the Flow of Funds
strategic challenges and the flow of funds
Strategic challenges and the Flow of Funds
  • Baby boomers
  • Third world development
  • Differential savings rates
  • Trade flows and trading blocs
  • Domestic issues
    • Low-income customers
    • Community redevelopment
for next week
For Next Week
  • Review Chapter 2 discussed this week
  • Read Chapter 5 and Copeland et al “Valuation” chapters on banks and insurance companies for next week
  • Review example of FSI valuation
  • Choose firms for members of the group
  • Obtain basic financial data, Value Line Investment Survey, and other analyses