Essay Question Example | Topics and Well Written Essays - 500 words - 3

Question - Essay Example External factors are the forces that come from outside the financial industries and affect their normal operations directly or indirectly. In most cases, external factors are beyond the industries’ control. The management of financial institutions has no control over them. The factors demand a robust legal framework to regulate. External factors include demographic, political, technological the size of the industries themselves. The demographic structure is the composition and age of a population. The pupation is the primary market of the financial institutions. The age of population influences the financial services directly. The older and younger population is less productive to the financial institutions because they do not use the banking services very often. They are mainly consumers instead of investors. Some customers fail to honor their financial obligations such as timely loan repayment. The political environment has a critical role in determining the failure or success of the banking sectors. The government has direct control over the financial through central banks. The countries, the central bank, have the mandate to regulate interest rates. The government may also formulate policies that make it very challenging financial institutions to run their activities seamlessly. The state of political instability destabilizes the banking systems. Because of the advancement in technology, financial institutions face serious financial crimes ranging from money laundering to robbery of banks through technological means such as using guns to rob banks. Internal factors affecting the financial services industry are forces that emanate from within the industries themselves. The factors include industrial norms, ideologies, and management structures among others. Failure by the management to comply with the norms and ethics of the industries has a negative influence on the growth of the industry. The insider