Such association extends the perimeter of the parent bank’s support to the sponsored entities much beyond the obligations defined by the share holding or voting power. While such concerns can be mitigated to some extent by holding additional capital using some sort of proxy, the effective containment of such risks rests only in limiting such activities. 33.
I must however admit that it is impossible to have a straightjacket framework and in the recent past, there have been many instances which have tested the scope and nature of banks’ involvement with market-based systems. •  Corporate bond market: The interplay between bank based and market based models has been very prominent in the case of corporate finance.