卧的贸易孝 1951 Chapter 1 Fundamental Forces of Change in Banking
Chapter 1 Chapter 1 Fundamental Forces of Fundamental Forces of Change in Banking Change in Banking
What were banks in the past? Historically,commercial banks have been the most heavily regulated companies. ■ Resulted in a banking system with a large number of smaller banks that was limited in the scope of products and services that could be offered and the geographic areas where individual banks could compete. As a result,they were the safest and most conservative business. Although regulations limited opportunities and risks,they virtually guaranteed a profit. 麓行贺影≠号
What were banks in the past? What were banks in the past? Historically, commercial banks have been the most heavily regulated companies. Resulted in a banking system with a large number of smaller banks that was limited in the scope of products and services that could be offered and the geographic areas where individual banks could compete. As a result, they were the safest and most conservative business. Although regulations limited opportunities and risks, they virtually guaranteed a profit
Two areas of changes Traditional role of banks as financial intermediaries declined New products such as cash management accounts, mutual funds,commercial paper,and junk bonds have become more prevalent. Banks have responded by accepting lower spreads, taking on more risk,and expanding their customer and product base. Evolution of banking into nontraditional roles 猫的资6+孝
Two areas of changes Two areas of changes Traditional role of banks as financial intermediaries declined New products such as cash management accounts, mutual funds, commercial paper, and junk bonds have become more prevalent. Banks have responded by accepting lower spreads, taking on more risk, and expanding their customer and product base. Evolution of banking into nontraditional roles
Evolution of banking into nontraditional roles Expand into nontraditional areas and products to generate more fee income. Actively pursue the use of technology in the development and delivery of products. Gramm-Leach-Bliley Act eliminates most of the remaining restrictions that have separated commercial banking, investment banking,and insurance for over 70 years. 碰封价贸易大考
Evolution of banking into Evolution of banking into nontraditional roles nontraditional roles Expand into nontraditional areas and products to generate more fee income. Actively pursue the use of technology in the development and delivery of products. Gramm-Leach-Bliley Act eliminates most of the remaining restrictions that have separated commercial banking, investment banking, and insurance for over 70 years
Deregulation and Competition Many analysts attribute much of the change in the financial services industry to deregulation. Deregulation was a natural response to increased competition rather than the catalyst of competition. ■ competition between depository institutions and nondepository financial firms,and ■ competition between the same type of competitors across world markets Deregulation sped up the process,but did not necessarily start it. 的资5土号
Deregulation and Competition Deregulation and Competition Many analysts attribute much of the change in the financial services industry to deregulation. Deregulation was a natural response to increased competition rather than the catalyst of competition. competition between depository institutions and nondepository financial firms, and competition between the same type of competitors across world markets Deregulation sped up the process, but did not necessarily start it
Regulatory Dialectic Since World War ll,banks and other market participants have consistently restructured their operations to circumvent regulation and meet perceived customer needs.In response, regulators or lawmakers would impose new restrictions,which market participants circumvented again. 碰封卧价贸易大考
Regulatory Dialectic Regulatory Dialectic Since World War II, banks and other market participants have consistently restructured their operations to circumvent regulation and meet perceived customer needs. In response, regulators or lawmakers would impose new restrictions, which market participants circumvented again
Regulatory Dialectic Regulation: Restrictions Deregulation: Customer Banks: ■■■■ Eliminate restrictions Needs Innovation Reregulation: New Restrictions 封酥的贸易+孝
Regulatory Dialectic Regulatory Dialectic Customer Needs Regulation: Restrictions Banks: Innovation Deregulation: Eliminate restrictions Reregulation: New Restrictions
Regulatory Pendulum Customer Needs Regulation Deregulation: Reregulation: Banks: Eliminate Restrictions Innovation restrictions New Restrictions 麓的贫香小手
Regulatory Pendulum Regulatory Pendulum Customer Needs Regulation & Reregulation: Restrictions & New Restrictions Deregulation: Eliminate restrictions Banks: Innovation
What makes a bank 'special?' The answer lies in our history;with the implementation of: The Glass-Steagal/Act which created three separate industries:commercial banking,investment banking, and insurance. The Bank Holding Act determined activities closely related to banking and limited the scope of activities a company could engage in if it owned a bank. The McFadden Act limited the geographic market of banking by allowing individual states to determine the extent to which a bank could branch intra-or inter- state. 的资5土号
What makes a bank What makes a bank ‘special? special? ’ The answer lies in our history; with the implementation of: The Glass-Steagall Act which created three separate industries: commercial banking, investment banking, and insurance. The Bank Holding Act determined activities closely related to banking and limited the scope of activities a company could engage in if it owned a bank. The McFadden Act limited the geographic market of banking by allowing individual states to determine the extent to which a bank could branch intra- or interstate
Consolidating and Diversifying Simultaneously The traditional definition of a bank has been blurred by the introduction of new products and a wave of mergers,which have dramatically expanded the scope of activities that banks engage in and where products and services are offered. What constitutes a bank,today is not as important as what products and services are offered and in what geographic markets the financial services company competes in. 麓封强的黄香+孝
Consolidating and Diversifying Consolidating and Diversifying Simultaneously Simultaneously The traditional definition of a bank has been blurred by the introduction of new products and a wave of mergers, which have dramatically expanded the scope of activities that banks engage in and where products and services are offered. What constitutes a bank, today is not as important as what products and services are offered and in what geographic markets the financial services company competes in
