Electronic Business: Concepts, Methodologies, Tools, and Applications (4-Volumes) P230

IT Development and the Separation of Banking and Commerce merce into banking is laxer than the entry from EDQNLQJLQWRFRPPHUFHDQG³RQHZD\´UHJXODWLRQ LVQRWFRQ¿QHGWR-DSDQEXWLVFRPPRQLQPDQ\ countries; (3) There is tendency that revenue of banks is recovered and that the banking sector is developed with relaxation of restriction; (4) It is often the case in the countries where restriction on the scope of business conducted by banks is lax that there are fewer nonperforming loans and ¿QDQFLDOFULVHVLQDGGLWLRQWKHVDIHW\QHWLQFOXG-ing deposit insurance is reduced. However, Watanabe’s analysis raises some questions in the following points which are dif-¿FXOWWRDJUHHRQ:DWDQDEH¶VDQDO\VLVGRHVQ¶W consider the U.S., a developed country where restriction on the scope of business conducted by banks is stern, (2) Watanabe’s analysis compared RQO\OLPLWHG¿JXUHVLQFOXGLQJWKHUDWLRRIPLQLPDO shareholding by banks, bank’s ROA and ROE, and ratio of nonperforming loans, when forming a conclusion and differences of bank’s power of industry control, history and business practices are not considered. For example, (a) it is not Japan but the U.S. where restriction on scope of busi-ness conducted by bank is extremely stern, (b) it is dangerous to determine the level of entry only with the ratio of minimal shareholding by banks and not considering individual circumstances, (c) it is doubtful whether the general theory that relaxation of restriction on scope of business con-ducted by banks leads to revenue improvement can be adopted to this case in a situation where the synergy effect of banking and commerce is realistically not so much expected, and (d) even though a lack of nonperforming loans is related to easing of restrictions on the scope of business conducted by banks, a casual linkage between few nonperforming loans and relaxation of restriction on scope of business conducted by bank cannot EHFRQ¿UPHG&RQVLGHULQJWKHSRLQWVPHQWLRQHG it seems that there is not enough material to consider prompt revision of the law and that it is desirable to judge the time to be right to revise the law while watching development of business opportunities. CONCLUSION 1RZLWLVGLI¿FXOWWR¿QGDFDVHLQZKLFKDV\QHUJ\ effect could not be achieved by a means other than DEDQN¶VRZQHUVKLSRIQRQ¿QDQFLDO¿UPVWKURXJK holding equity. Under these circumstances, it is not so unnatural for the supervising authorities of both Japan and the U.S. to still worry seriously about reducing the existing measures against risks. It seems that there is not a strong necessity to ease regulations until such cases, in which a synergy effect is fully achieved by a bank’s entry into FRPPHUFHRFFXUVLQ(XURSHZKHUH³WZRZD\´ regulation is adopted. If banks in Japan and the U.S. want to actively seek the chance to achieve a synergy effect, they have only to do it through WKHLUDI¿OLDWHFRPSDQLHVLQ(XURSH+RZHYHUDV the pace of change in the economic environment is fast in the IT society, Japanese and American governments, from the perspective of global competition, will have to work on developing legislation quickly when they see the appearance RID¿HOGZKHUHVRPHV\QHUJ\HIIHFWLVH[SHFWHG Therefore, it is important to continue theoretical discussion. FUTURE RESEARCH DIRECTIONS Unlike European nations, separation between banking and commerce has been maintained in Japan and the U.S. because: though managing both banking and commerce (shareholding) has such advantages as (1) economies of scale, (2) risk dispersal, and (3) smaller cost for consum-ers to collect information (one-stop shopping); it also has such disadvantages as (1) diseconomies of scale, (2) fear of control over industry, and (3) PRUHFRPSOH[LW\DQGKLJKHUFRVWRI¿QDQFLDOVX-pervision. Today, in light of IT advancement and FKDQJHVLQWKH¿QDQFLDOHQYLURQPHQWGHPDQGIRU entry has been increasing, from banking to com-merce in Japan, and from commerce to banking in the U.S. For instance, in Japan, the banking 2224 IT Development and the Separation of Banking and Commerce industry claims that banks’ entry to commerce would not cause the above disadvantages thanks to regulations requiring competition among banks, market rules, and the arm’s length rule, and that banks’ dual operation of real estate business, on-line-trade-related business, or personal security ¿QDQFHEXVLQHVVZRXOGSURGXFHDV\QHUJ\HIIHFW ZKLFKZRXOGDOVREHQH¿WFRQVXPHUV+RZHYHU banks effectively can enter into commerce without holding shares, and many are doubtful about the extent of the claimed synergy effect. So, it is essen-tial to measure and verify actual advantages and disadvantages as much as possible to decide the degree of deregulation of share-holding limits. On the other hand, as the issue is closely con-nected with other issues including IT advance-PHQWDQG,VODPLF¿QDQFHGHYHORSPHQWIXWXUH environmental changes and political factors may affect the course of separation of banking and commerce. First, in online banking, the money economy that does not go through the bank system is spread- or the U.S. invites Islamic banks and grants them banking licenses, legal arrangements are needed to exemptmurabaha and other dealings of goods from bans on banks’ commercial business opera-tion. Separation rules of banking and commerce may face revision in light of such moves. REFERENCES Brown, J. (2002). The separation of banking and commerce. GIS for Equitable and Sustainable &RPPXQLWLHVODVWPRGL¿HGRQ2FWREHU Available at http://www.public-gis.org/reports/ sbc.html Caprio, G., Levine, R. E., & Barth, J. R. (2001, November). Bank regulation and supervision: What works best? Policy Research Working Paper 2725. The World Bank. Available at the World Bank Web site. Cocheo, S. (1997, October). What’s at stake with ing. For example, it is estimated that about one unitary thrifts? ABA Banking Journal, http:// trillion yen worth of points are issued annually in Japan only; and in the market of RMT, exchange of online game currency and real currency is said to have expanded to over the 15 billion yen scale. It means that commerce has already been running a large part of the account settlement business, which is in theory to be operated by banks, by means of issuing points and game currency, thus making a foray to banking business. Separation rules of banking and commerce may be compelled to approve the move. 6HFRQGDV,VODPLF¿QDQFHJURZVPRYHVWR invite the Islamic economy are active in many nations worldwide, such as the United Kingdom, Singapore, and Malaysia. Interest (riba) is pro-hibited in the Islamic economy and commercial dealings (al-bay) are allowed instead of regular ¿QDQFLQJRSHUDWHGE\EDQNVRIRWKHUFRXQWULHV Islamic banks operate murabaha, which is pur-chase and resale of ordinary merchandise, and ijara, which is similar to leasing. In case Japan www.banking.com/aba/unitary_1097.asp FRBSF. (1998, July 3). The separation of bank-ing and commerce. Federal Reserve Bank of San Francisco (FRBSF) Economic Letter. Available at http://www.sf.frb.org/econrsrch/wklyltr/wkl-yltr98/el98-21.html Iwahara, S. (2003). Denshi Kessai to Hou (Elec-tronic Payments and Law in Japanese). Yuuhi-kaku., p. 625. Japanese Bankers Association. (2006). The bank-ing system in Japan. Zenginkyo. p.161 & p. 19. Kaizuka, K., Kousai, Y., Nonaka, I. (Eds.). (1996). Nihon Keizai Jiten (Dictionary of Japanese Economy in Japanese). Nihon Keizai Shinbun-sha. p. 1387. Kinyu Chousa Kenkyu Kai (KCKK: Financial Research Study Group in Japanese). (2006, July). Kinyu No Conglomerate Ka Tou Ni Taiou Shita 2225 IT Development and the Separation of Banking and Commerce Kinyu Seido No Seibi. Creating A New Financial System. The Financial Research Study Group (Report No. 36). original is in Japanese only. 2I¿FHRI7KULIW6XSHUYLVLRQ1RYHPEHU Historical framework for regulation of activities of unitary savings and loan holding companies. http://www.ots.treas.gov/docs/4/48035.html Seaman, R. (1998). English translation of Japa-nese banking law. (updated January 1998). http:// www.japanlaw.info/banking/1981.htm Umeda, A. (2006, April). Ginkou to Shougyou no one-way Kisei Ni Tsuite (Regarding “One-way” regulation of banking and commerce in Japanese). Mizuho Research Institute. p. 18. Watanabe, T. (2006, July). Ginkou No Gyoumu Han-i Kisei Ni Tsuite (On Regulations of the Scope of Bank Business Activities in Japanese). Kinyu. pp. 3-11. World Bank. (2000, 2003). Bank Regulation and Supervision: Finance and Private Sector Research. http://www.worldbank.org ADDITIONAL READING Munir, A. B. (2004). Internet banking: Law and practice. LexisNexis Butterworths. Richmond Law & Tax Ltd. (2005). Financial Services Regulation in Europe. p. 760. Scott, H. S. (2004). ,QWHUQDWLRQDO¿QDQFH/DZ and regulation. Thomson Sweet & Maxwell. Vernados, A. M. (2006). Islamic banking & ¿QDQFHLQ6RXWK(DVW$VLD (2nd ed.). World Sci-HQWL¿F ENDNOTES regulations: Section 10, 11, 12, and 52 (21) prohibit bank and bank holding companies from engaging in other business; Sections 16 (3) and 52 (23) restrict banks and bank holding companies from having subsidiar-LHVDQGDI¿OLDWHVWKDWHQJDJHLQFRPPHUFH Sections 16 (3) and 52 (24) ban banks from having more than 5% and bank holding companies from having more than 15% of shares of commercial companies in total. 2 To promote free and fair competition, the Japanese Antimonopoly Code, Section 11 prohibits banks from having more than 5% of shares of commercial companies. 3 In the U.S., commercial companies obtaining more than 25% of bank shares are deemed to EH³EDQNKROGLQJFRPSDQLHV´DQGPXVWVHSD-UDWHQRQ¿QDQFLDOEXVLQHVVHVLQSULQFLSOH Banks cannot hold commercial companies’ shares and bank holding companies cannot have more than 5% of shares of commercial companies. 4 7KLV WHFKQLFDO WHUP LV ¿UVWO\ LQWURGXFHG LQWKH¿QDQFLDOUHVHDUFKVWXG\FRQIHUHQFH held at the Japanese Bankers Association on March 10, 2006. See p. 3 of Kinyu Chousa Kenkyu Kai (2006). 5 Ibid. 6 Ibid. 7 In some major European countries, com-mercial companies can hold up to 100% of bank shares if they meet the requirements for major stockholders, and banks can also hold up to 100% of commercial companies shares if they meet the capital requirements. 8 The Clayton Antitrust Act of 1914, October 15, 1914, ch. 323, 38 Stat. FRGL¿HG at 15 U.S.C. § 12-27, 29 U.S.C. § 52, 29 U.S.C. § 53. 9 48 Stat. 162 (1933). 10 12 USCS 1841-1850. 1 To maintain the soundness of banking, the Japanese Banking Act has the following 11 )RUGHWDLOVVHH2I¿FHRI7KULIW6XSHUYLVLRQ (2006). 12 Pub. L. No. 106-102, 106th Cong., 1st Sess. 2226 IT Development and the Separation of Banking and Commerce (1999). 13 See pp. 61- 63 at Japanese Bankers Associa-tion (2006). 14 See p.37 at Kaizuka, K., Kousai, Y., Nonaka, I., Eds. (1996). 15 See p.42 at Id. 16 See p.37 at Id. 17 Though the Tokyo Watanabe Bank did not fail, the Minister of Finance, Mr. Kataoka VDLGE\PLVWDNHWKDW³WKH7RN\R:DWDQDEH Bank failed at around noon today” in the Diet meeting in March 14, 1927. See p.42 at Id. 18 See pp.37-42 at Id. (1996). 19 Law No.59 in 1981. For English translation of this law, see Seaman, R. (1998). 20 Article 4 of the Banking Law stipulates that none shall engage in banking unless licensed by the Prime Minister. To qualify for a license, the application must have a FHUWDLQ¿QDQFLDOFDSDFLW\SRVVHVVFRPSH-tent knowledge, and experience to carry out banking business and have adequate social credibility. See p.64 at Japanese Bankers Association (2006). 21 See pp.66-69 at Id. 22 $FFRUGLQJWRSDW,G³WKH-DSDQHVH %DQNLQJ/DZLVXQLTXHLQWKDWLWGH¿QHVQRW only taking deposits but also fund trans-fers as typical bank business. The bulk of transfers are between deposit accounts for settlement purposes. It is a measure of the reliability of banks and the banking system that settlement, which occupies a vital posi-WLRQLQWKHÀRZRIIXQGVLVHQWUXVWHGRQO\ WR EDQNV DQG RWKHU GHSRVLWRU\ ¿QDQFLDO institutions.” 23 For details, see Iwahara (2003). 24 For details, see pp.17-18 and p.40 at Japanese Bankers Association (2006). 25 For example, see Umeda, A. (2006). 26 7KLVUXOHZDV¿UVWLQWURGXFHGLQWREDQ transactions with the subsidiary that would prejudice the interest of the bank. With the 1998 amendments, the range of businesses was expanded open to bank subsidiaries and DI¿OLDWHVDQGWKHVFRSHRIWKHDUP¶VOHQJWK rule was extended. The 2001 amendments made major shareholders subject to this rule in step with the addition of the regulations on major shareholders. See article 13-2 and pp. 70-71 at the Japanese Bankers Associa-tion (2006). 27 For details, see Cocheo, S. (1997). 28 See World Bank (2000, 2003). This work was previously published in Cyberlaw for Global E-business: Finance, Payments, and Dispute Resolution, edited by T. Kubota, pp. 53-66, copyright 2008 by Information Science Reference (an imprint of IGI Global). 2227 2228 Chapter 7.17 Electronic Risk Management Tapen Sinha Instituto Tecnológico Autónomo de México, Mexico and University of Nottingham, UK Bradly Condon Instituto Tecnológico Autónomo de México, Mexico and Bond University, Australia ABSTRACT Doing business on the Internet has many op-portunities along with many risks. This chapter focuses on a series of risks of legal liability aris-ing from e-mail and Internet activities that are a common part of many e-businesses. Some of the laws governing these electronic activities are new and especially designed for the electronic age, while others are more traditional laws whose application to electronic activities is the novelty. E-business not only exposes companies to new types of liability risk, but also increases the po-tential number of claims and the complexity of dealing with those claims. The international nature of the Internet, together with a lack of uniformity of laws governing the same activities in different countries, means that companies need to proceed with caution. INTRODUCTION Within 48 hours after Katrina came ashore, a number of Web sites cropped up claiming that they are for hurricane relief. At the click of a computer Web site, you could donate money for the victims. Some of them even allowed you to donate money through a Red Cross Web site. Unfortunately, many of them turned out to be fraudulent. When you thought you were going to the Red Cross Web site, you would be taken to a different one and your credit card information would be stolen and sold to the highest bidder. In the electronic parlance, this process is called ³SKLVKLQJ´VHH$SSHQGL[IRUWHUPLQRORJLHV Electronic information transfer has become the backbone of our information society. Therefore, it is not surprising that it has also increased the Copyright © 2009, IGI Global, distributing in print or electronic forms without written permission of IGI Global is prohibited. ... - tailieumienphi.vn