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Chapter Sixteen
COMMERCIAL BANKING INDUSTRY: STRUCTURE AND
COMPETITION
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Historical Development of the Banking Industry Outcome:
Multiple Regulatory Agencies
1. Federal Reserve
2. FDIC
3. Office of the Comptroller of the Currency
4. State Banking Authorities
金融監理一元化 ?
金融局
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Structure of the Commercial Banking Industry
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Ten Largest U.S. Banks
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Branching RegulationsBranching Restrictions:
Very anticompetitive
Response to Branching Restrictions1. Bank Holding Companies
A. Allowed purchases of banks outside state
B. BHCs allowed wider scope of activities by Fed
C. BHCs dominant form of corporate structure for banks
2. Nonbank BanksNot subject to branching regulations, but loophole closed
in 1987
3. Automated Teller MachinesNot considered to be branch of bank, so networks
allowed
To issue commercial paper and lend to commercial bank
Deposit 與 loan 只做一樣
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Bank Consolidation and Number of Banks
1. 規模經濟,成本2. 多角化,風險3. 出現 super regional bank v.s. money center bank
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Nationwide Banking and Bank Consolidation
Bank Consolidation: Why? 1.Branching restrictions weakened
2.Development of superregional banks
Riegle-Neal Act of 19941.Allows full interstate branching
2.Promotes further consolidation
Future of Industry StructureWill become more like other countries, but not quite:
Several thousand, not several hundred
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Nationwide Banking and Bank Consolidation
Bank Consolidation: A Good Thing?壞處 Cons:
1. Fear of decline of small banks and small business lending, 使金融業變成 less competitive
2. Rush to consolidation may increase risk taking
好處 Pros:1. Community banks will survive 事實如此,如紐約州、加州2. Increase competition 使無效率之銀行退出市場3. Increased diversification of bank loan portfolios: lessens
likelihood of failures
自然 or 強迫 ?
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Separation of Banking and Securities Industries: Glass-Steagall:已被取消
Case for Glass-Steagall
1. FDIC gives unfair advantage to banks2. Allowing banks into underwriting is dangerous because
FDIC promotes too much risk takingmoral hazard3. Potential conflicts of interest
Case Against Glass-Steagall1. Decreases competition2. Unfair to banks3. Hinders diversification
Will Separation Continue?Fed, OCC, FDIC are allowing banks to engage in underwriting activities
銀行業的資金成本較便宜
若銀行承銷其貸款客戶的股票
證券業已可像銀行一樣吸收存款,而銀行卻不能進入獲利較佳的證券業務
Citibank 和 Traveler 1998 年之合併其實是違法 !
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Separation in Other Countries1. Universal banking: Germany
2. British-style universal banking
3. U.S./Japan separation
Separation of Banking and Securities Industries: Glass-Steagall
面臨別國銀行 ( 不見得有 G-S 法案之限制 ) 之競爭
可以 underwriting ,但需在不同的子公司,較不能持有公司股票,較少和保險結合
不准買公司股票。可有BHC
不能有 BHC 可以持有公司股票
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International BankingWhy Rapid Growth
1. Rapid growth of international trade
2. Banks abroad can pursue activities not allowed in home country
3. Tap into Eurodollar market
U.S. Banks Overseas 1. Regulators
A. Federal Reserve (Regulation K)
2. StructureA. Edge Act Corporations
B. International Banking Facilities
為了與外國銀行競爭,成立了 OBU (offshore banking unit), 存貸皆外幣為之,且不課稅,不受存款準備率之規範
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Foreign Banks in U.S.1. Regulators
A. Same as for U.S. domestic banks
2. StructureA. 500 offices in U.S.
B. 20% of total U.S. bank assets
International Banking
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Ten Largest Banks in the World
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Financial Innovation and Decline in Traditional Banking
Innovations Increasing Competition against commercial banks1. Money market mutual funds
— Avoids deposit rate ceilings and reserve requirements
2. Junk bonds— Result of better info in credit markets
3. Commercial paper market— Result of better info in credit markets and rise in money market
mutual funds
4. Securitization— Result of better info in credit markets and computer technology
由於 computer 及 telecommunication
2/3 的自用住宅來抵押貸款已被證券化了 !
評估信用風險降低交易成本
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The Decline in Banks as a Source of Finance
For nonfinancial firms
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Bank Profitability
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Share of Noninterest Income
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Decline in Traditional Banking
Loss of Cost Advantages in Acquiring Funds (Liabilities)
π i then disintermediation because1. Deposit rate ceilings and regulation Q
2. Money market mutual funds
3. Foreign banks have cheaper source of funds: Japanese banks can tap large savings pool
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Decline in Traditional Banking
Loss of Income Advantages on Uses of Funds (Assets)1. Easier to use securities markets to raise funds:
commercial paper, junk bonds, securitization
2. Finance companies more important because easier for them to raise funds
一般企業
Issue C.P.
其他非銀行之金融機構也可以 make loan 之後再加以證券化由於 computer tech 使得:交易成本;資訊收集容易,風險易評估
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Bank Failures
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Banks' Response
Loss of cost advantages in raising funds and income advantages in making loans causes reduction in profitability in traditional banking1. Expand lending into riskier areas: e.g., real
estate
2. Expand into off-balance sheet activities
3. Creates problems for U.S. regulatory system
Similar problems for banking industry in other countries