Bank failure in jamaica Essay Example | Topics and Well Written Essays - 500 words

Bank failure in jamaica - Essay Example According to Jenifer Daley, the banking industry in Jamaica relied on foreign-owned banks. Foreign heads managed these banks, and the banks depended on the requirements of foreign legislation. The banking industry in Jamaica was crowded with diverse financial institutions including building societies, credit unions, money markets, export-import banks and stock exchanges. Commercial banks dominated the financial sector, in Jamaica. This diversity led to the fragility within the banking environment and structure (Daley 4). The changes in the banking sector in 1990s showed these fragilities in the arrangement of the banking industry. This placed immense pressure on the institutional structure and financial resources. The banking environment in Jamaica resulted from immense deregulation of activities, in the financial sector. This increased competitive challenges for the financial firms and banks. This mandated a strong Central Bank with roles such as the formation of monetary policies and directing an orderly development and growth of the system. Additionally, the experienced growth in the industry provided a springboard for the establishment and proliferation of financial firms and groups with different structures. These structures contributed to the breakdown of operational safeguards because of their fashion of operations (Daley 3). The structures also pressurized the cadre of managers. The instability experienced in 1980-1990s led to the unfavorable macroeconomic climates because of no-growth on the real sector and high inflation. This led to the beginning of government guidelines in the industry. Later politics took a central role in the management of the financial sector. The Finance Minister controlled the Central National Bank and closed it because of insolvency. The bank was illiquid and insolvent than the financial statement of 1997 had indicated. The bank tried to hide this state by ignoring the provision of