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In: Finance

Give two advantages and one disadvantage of value driven culture over the immediate driven culture in...

Give two advantages and one disadvantage of value driven culture over the immediate driven culture in banking industry.

Solutions

Expert Solution

Credit culture adopted by the banking industries or firm is often influenced by the core values adopted by the firm, the working culture of its management and the vision of its leaders. By many times the market influence may push the firm to adopt a different credit culture to adopt with the changing needs of the people. A value driven vs a intermediate performance driven credit culture is good for the firm or industry as:

1. Focus on long term consistent growth

2. Not affected by Global shocks or market inconsistencies and thus less impact of volatility & risk

But a value driven credit culture has some disadvantages relative to intermediate performance driven credit strategy like:

1. Long time gap for impact on the growth and earnings of bank

2. Less motivational to the workforce as the impact of value driven not visible while relatively intermediate performance driven helps grow earnings and stock prices helping keep the morale of all stakeholder high


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