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The equation of unified knowledge says that S = f (A,P) which means that the practical solution to a given problem is a function of the existing, empirical, actual realities and the future, potential, best possible conditions of general stable equilibrium which both pure and practical reason, exhaustive in the Kantian sense, show as being within the realm of potential realities beyond any doubt. The first classical revolution in economic thinking, included in factor “P” of the equation, conceived the economic and financial problems in terms of a model of ideal conditions of stable equilibrium but neglected the full consideration of the existing, actual conditions. That is the main reason why, in the end, it failed. The second modern revolution, included in factor “A” of the equation, conceived the economic and financial problems in terms of the existing, actual conditions, usually in disequilibrium or unstable equilibrium (in case of stagnation) and neglected the sense of right direction expressed in factor “P” or the realization of general, stable equilibrium. That is the main reason why the modern revolution failed in the past and is failing in front of our eyes in the present. The equation of unified knowledge, perceived as a sui generis synthesis between classical and modern thinking has been applied rigorously and systematically in writing the enclosed American‐British economic, monetary, financial and social stabilization plans. In the final analysis, a new economic philosophy, based on a synthesis between classical and modern thinking, called here the new economics of unified knowledge, is applied to solve the malaise of the twentieth century which resulted from a confusion between thinking in terms of stable equilibrium on the one hand and disequilibrium or unstable equilibrium on the other.

The article reviews the development of the international (offshore) banking sector in Cyprus and focuses on the effects of the transitional corporate tax regime, introduced for this sector, since the country’s admission into the European Union. The consolidated performance of international banks and data collected through semi‐structured questionnaires are examined to provide important insights into how management perceives of the new tax regime and of its impact upon the country’s attractiveness as an international banking center.

Marketing of international banking services in the Asia Pacific region must proceed from understanding both the locational needs of international banks and of the financial centres in which they locate. Presents the findings of a detailed series of interviews in major financial centres and by major financial sector. These mesh with findings found in the surveyed location literature. Also explores the development of international financial centres as this is closely tied to location of financial firms. Concludes that the sort of sectoral locational analysis conducted here provides highly useful information for the location of international banking in the major Asia Pacific centres. Hong Kong, Singapore and Tokyo are, not surprisingly, the prime locations for marketing the broadest array of international banking services.

Given the importance of understanding the dynamics of the internationalisation and expansion process, it is surprising that – in reviewing the extensive literature – that little attention has been paid to service organisations. This paper attempts to shed light on business strategies and the international entry modes of the services sector in general, and the area of banking which form a significant and substantive proportion of global trade. Therefore, this paper aims to address this omission by exploring the behaviour of Malaysian multinational financial and banking service industries in their international expansion in terms of their motivation, mode of entry strategies, selection of target markets, and their strategic thrusts.

The paper follows an exploratory approach utilising qualitative multiple case studies. Empirical data are presented from case study of four large Malaysian‐based multinational commercial banks through interviews with managers from the banks' headquarters as well as managers responsible for and/or engaged in the development and implementation of international marketing strategies.

It is inferred that Malaysian multinational commercial banks are entering foreign markets, employing a foreign direct investment entry mode, by creating branches and representative offices, and in some cases by acquiring part of the share or the whole capital of existing local financial institutions. These expansions have been motivated by several factors related to both their domestic markets (push factors: government initiatives, small size, low and limited growth) and the attractiveness of their target markets (pull factors/location advantages: high market growth, low to moderate levels of competition).

The case study has inherently limited the capacity to offer generalisations concerning other service companies.

This paper is rich in its practical implications. As this study was concerned with the practical experience and behaviour of Malaysian‐based multinational banks on their choice of entry modes and organisational forms when internationalising, Malaysian banking and marketing practitioners can use the analysis and results as a means of comparing their current tactical and strategy foreign entry behaviour with that of other internationalising banks.

The paper offers new insights into the emergence and international expansion of Malaysian‐based multinational commercial banks, and sheds light on the internationalisation process associated with services per se.

The need for international regulation of financial markets became apparent in the mid‐1970s in response to the post‐Bretton Woods liberalisation of financial markets. The elimination of the fixed exchange rate parity with gold resulted in the privatisation of financial risk, which created pressure to eliminate controls on cross‐border capital movements and the further deregulation of financial markets. It became necessary for national regulatory authorities to promote safe and sound banking systems through the effective management of systemic risk in national markets. Similarly, the need for international standards of prudential supervision was also recognised, to prevent solvent banking institutions in one jurisdiction from losing business to less respectable institutions operating in other jurisdictions whose laws permitted cut‐rate financial services and other risky financial practices. The privatisation of financial risk also created the need for financial institutions to spread their risks over many assets and activities, which led, in turn, to a significant increase in short‐term cross‐border portfolio investment that has, in many instances, exposed capital‐importing countries to increased systemic risk due to the volatility of such investments.

This paper examines the need for international regulation of financial markets and suggests the possible role that a global financial supervisor might play in providing effective regulation of international financial markets. The first part discusses the nature of systemic risk in the international financial system and the necessity for international Minimum Standards of prudential supervision for banking institutions. The second part examines the efforts of the Basel Committee on Banking Supervision to devise non‐binding international standards for managing systemic risk in financial markets. Recent financial crises in Asia, Russia and Latin America suggest, however, that informal efforts by international bodies such as the Basel Committee are inadequate to address the risk of systemic failure in financial systems. The third part therefore argues that efficient international financial regulation requires certain regulatory functions to be performed by a global supervisor acting in conjunction with national regulatory authorities. These functions should involve the authorisation of financial institutions, generation of rules and standards of regulatory practice, surveillance of financial markets, and coordination with national authorities in implementing and enforcing such standards.

We compare the aggregated international assets and liabilities of banks that report to the Bank for International Settlements (BIS) to establish their gross and net international exposures during recent episodes of financial crisis. Initially we consider these positions worldwide and then focus on the cross-border flows within Europe, considered in terms of core and peripheral countries. These gross and net asset–liability positions are both time-varying and respond to crisis periods, through better matching of international assets and liabilities as well as the realignment of asset positions to reduce balance sheet risks. These conclusions are consistent with other studies that utilise international banking flow data, while the European experience highlights the diversity of international position taking. This is due to the complexity of managing risks within the eurozone (EZ) and peripheral countries, and those emerging European countries that retain legacy currencies.

This chapter’s goal is to define the kind of seeds to be planted for moving forward in the safe and stable drive toward a leading central banking role directed at achieving a sustained Islamic banking and finance development within the global financial system. The system witnessed the input of Islamic banking with its fruitful contribution as a feasible banking structure in both implementing agreed reforms and shaping the next steps directed toward crisis prevention and crisis resolution.

The adopted approach is based upon scientific conceptual basis as well as the practical experience related to the central banking role and Islamic banking evolution. This chapter will define the strategic role of Central Banks and highlight the conceptual basis governing the leading role of central banks as well as the practical basis derived from our central banking and Islamic banking experience.

In light of the conceptual and practical basis for enabling an efficient and effective role of Central Banks as a regulatory body in shaping the future of the Islamic Financial System. Legal, institutional and managerial strategic determinants for this role have been defined.

The analytical work of this chapter crystallises in a pioneering initiative the main determining factors governing the role of central banks as the main regulatory body for Islamic banking, and how this role could be effective in affecting the future role to be played by the Islamic banks in the global financial system. Also, to this end, the integrated required role by central banks, public policies, multilateral institutions and Islamic banks are illustrated.

Energy and cooperative hard work and commitment from all players, including the regulators of Islamic banks supported by public policies, international and multilateral institutions and members of the Islamic banking family is thought to be the main determining factor for transforming the Islamic banking family into one that will make the Islamic people and all humanity – through the global financial system – live with more stability, welfare and happiness.

Correspondent banking, the provision of services by one bank to another, has been a neglected area of academic research, and literature lacks a comprehensive theoretical framework to describe correspondent relationships. The bulk of previous studies have been conducted in the USA, where the regulatory environment places particular requirements on correspondent banking relationships that are difficult to generalise to countries such as Australia. This paper explores two theoretical frameworks for correspondent banking. The first sees correspondent banking in a financial contracting cost‐reduction framework, in line with theoretical models of financial intermediation. The second framework is based on Dunning’s (1979) eclectic theory of international investment. Correspondent banking is viewed as a strategic tool to be used when a banking firm does not at present possess a full range of ownership‐specific, locational and internalisation advantages. The paper reviews the traditional and modern functions of correspondent banking and the structural arrangements that can be put in place to organise these activities. Case studies of two banks, operating in Australia, are used to illustrate the different strategic and structural approaches that can be utilised in respect of correspondent banking.