Introduction

The management of money and other financial assets is a service that is provided by the financial services industry. This industry is linked to every business that is operating because one way or the other they all deal with the flow and movement of cash. There are many responsibilities that are to be fulfilled by the financial services provider  (Coleman, 2016). The financial sectors that are operating in the modern world are investment banking, commercial banking, brokerage services, and securities analysis. This concept can be analyzed in the broader spectrum where this industry may include securities exchange and financial consulting. This industry can contribute in many ways including insurance and lending services for the customers. Now there is a huge number of institutions that are working in this service industry as this industry is growing faster because people want to make smarter choices regarding their finance.

 

Financial Service Providers

The Central Bank of Oman is through which the government of Oman provides financial services to the people. This body is strong and this is the one that regulates the banking sector and other institutions that are providing financial services in any form or by any means. Central Bank makes the rules that other financial institutions have to follow and this is done to make sure that the institutions are kept in check. The bank works with these financial institutions to regulate the foreign exchange market and control credit creation  (Mader, 2018). This is also a part of the operations of the bank to monitor the economic conditions of the region and if there are any risks the bank intimates the relevant institutions about it. The advancement of the funds is done by the Central Bank and the commercial banks use those resources to provide support to the customers.

The financial providers operating in the Sultanate take care of multiple things for their customers including monitoring the assets of enterprises and individuals that need them. In some cases, these service providers also act as a facilitator between purchaser and seller (Clement, et al., 2017). They act as an intermediary between two parties to make sure that there is a smooth transaction of money. The terms and conditions on which the financial service providers provide loans are also set by the Central Bank. The terms and conditions that are set by the Central Bank cannot be violated.

There is a huge chunk of insurance companies operating in Oman to provide financial services to the residents. They form a significant portion of the financial industry of Oman. These companies help the business in surviving through tough times. Such financial service providers help the businesses operating in the market to excel and establish themselves. The consultation by the financial service providers can help the companies in increasing their profit margins and achieving their targets (Kaiser, et al., 2015).

A major part of the financial services providers is in the commercial banks that are operating in the Sultanate. These banks provide a variety of services for businesses of every scale. They provide financial support to the companies in the form of loans. These banks act as the third party in the financial transactions and it helps in the smooth transaction of the money (Van der Veer, 2015). These banks provide services in the form of different accounts that the customers can open to keep their money with the bank. The bank provides different services to the customers based on what type of account they operate.

 

Effects of oil price changes on investment bank’s operations and on their clients

The fluctuations in the oil price can have positive and negative implications for the investment banks and their clients. The functionality of the investment bank is linked with giant enterprises. The investment banks facilitate the transactions and sale or purchase operations of large enterprises (Mazzucato, 2016). The changes in oil prices have significant impacts on the businesses of Oman and eventually, the changes in oil prices impact the functionality of the investment banks.

The economy of Oman is largely based on the oil and gas industry. Mostly, the investment banks in Oman provide financial services to the oil and gas companies. The investment bank manages the finances of these companies and also helps in the exploration of investors and buyers of stocks from different countries (Kilian & Murphy, 2014). The profitability of investment banks is dependent on the oil and gas companies of Oman.

The rise in oil prices has positive consequences for investment banks and their clients. The increase in oil prices inflates the interest rate. The high-interest rate is favorable for the credit creation capacity of the banks (Mian & Santos, 2017). The acceleration in the credit creation process will expand the volume of money in the financial system. The volume of economic activities will increase along with the increase in oil prices. The high-profit margins of the oil companies will encourage borrowing and expansion of economic activities.

High financial liquidity will bolster the trading of stocks and transactions of money (Adrian, et al., 2017). These circumstances will boost the activities of the investment banks. During the period of high oil prices, the oil companies expand their businesses and seek global buyers to maximize their profitability. The oil companies consult investment banks to manage their assets, make new investments, carry out foreign transactions, and explore new buyers. These conditions increase the opportunities for the investment banks to boost their profitability by engaging maximum clients.

When the oil prices are declined, the financial liquidity is squeezed as the commercial banks squeeze their credit creation process to save the reserves. Eventually, the volume of economic activities in the oil and gas industry is minimized. The decline in the oil prices decreases the opportunities for the investment banks (Bolton, et al., 2016). The decrease in oil prices has negative consequences for investment banks and their clients.

 

Conclusion

Oman has a sound regulatory system for the financial service providers and that is why the financial services industry is in a good shape there. The Central Bank of Oman is the highest regulatory authority to control and monitor the activities of the financial service providers. The oil prices have a strong impact on the economy of Oman. As the prices vary so does the condition of the financial institutions. When the price is higher the institutions have enough money and the financial service providers can support more customers.

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