Assignment 2. Accounting, Finance, SPSS Coursework

Assignment 2
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Assignment 2
1.How does new technology cause banks’ traditional lending activities to decline in balance-sheet importance?
Financial service providers enjoyed quite a long period of competitive advantage with the use of old models dominated by balance-sheets as the main financial tool for evaluating the relationship between assets, liabilities, and net worth. With the emergence of new technologies, particularly the Financial Technologies (FinTech), every aspect of the banks' balance sheet (assets, liabilities, equity) has been greatly impacted. The new technologies presented a wide variety of options that are relatively cheaper and easy to access compared to the old model adopted in traditional banks.
There are numerous startups mainly focusing on FinTech that are already revolutionizing the financial services. New technologies have provided alternative ways for linking asset owners or rather lenders with the borrowers, depriving banks the exclusive role of being an intermediary between lenders and borrowers and thus rendering the traditional banks’ balance-sheet less important ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"gzeeqLxq","properties":{"formattedCitation":"(Temelkov, 2018)","plainCitation":"(Temelkov, 2018)","noteIndex":0},"citationItems":[{"id":807,"uris":["http://zotero.org/users/local/IBolxqVE/items/9CCXCDV7"],"uri":["http://zotero.org/users/local/IBolxqVE/items/9CCXCDV7"],"itemData":{"id":807,"type":"article-journal","container-title":"International journal of information, Business and Management","issue":"1","note":"publisher: Educational Research Multimedia & Publications","page":"137–143","source":"Google Scholar","title":"Fintech firms opportunity or threat for banks?","volume":"10","author":[{"family":"Temelkov","given":"Zoran"}],"issued":{"date-parts":[["2018"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Temelkov, 2018). For instance, new technologies have led to the development of cryptocurrencies such as bitcoin that can be freely exchanged without the intervention of banks. Besides, bitcoin can as well be seen as a digital form of cash, thus FinTech substitutes the key role of the bank as the main source of cash.
New technologies threaten the relevance of banks' balance-sheet by interfering with the various aspects (assets, liabilities, equity), offering alternatives that are relatively cheap and easy to access.
2.The deposit insurance program may ironically increase the likelihood that people will require even more deposit protection. List and explain three potential problems that deposit insurance creates or makes things worse.
Deposit insurance is a financial system whereby the government takes the responsibility of compensating depositor up to a certain amount of their deposits in case their bank fall victim of insolvency (Calomiris & Jaremski, 2016). Although it is often regarded as a big deal in ensuring the stability of a financial institution, some consequences come along with deposit insurance ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"o909pEIc","properties":{"formattedCitation":"(Calomiris & Jaremski, 2016)","plainCitation":"(Calomiris & Jare...