Basel II's supervisory review process guidelines and its potential impact on Austria's financial market supervision

Diploma Thesis from the year 2007 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, grade: 1, University of Applied Sciences Wiener Neustadt (Austria), language: English, abstract: Globalization has become an important aspect of our every day¿s life. It affects us as soon as we go shopping, turn on the television or travel abroad. Therefore, it is little surprising that globalization also impacts financial markets. It allows banks to spread their banking activities around the world by liberalizing many financial markets.

Due to this liberalization, financial markets evolve and the historical role of banks as primary source of financial intermediation begins to change. Consequently, banking sectors worldwide have been deregulated to allow banks to diversify their businesses into other financial areas.

This trend, also known as the formation of financial conglomerates, raises important considerations for the implementation of Basel II¿s supervisory review process. Singhal and Vij argue for instance that the increasing number of such groups will trigger severe problems in the multinational supervisor coordination and multi-sectored supervision. Due to the global operations of such conglomerates, different jurisdictions apply in different countries requiring the supervisors of each country to closely cooperate with each other.