Order Structure and Competition Assignment

Order Structure and Competition Assignment
1. Why was the United States one of the last of the major
industrialized countries to have a central bank?
*2. Which regulatory agency has the primary responsibility for supervising the following categories of commercial banks?
a. National banks
b. Bank holding companies
c. Non–Federal Reserve state banks
d. Federal Reserve member state banks
3. “The commercial banking industry in Canada is less
competitive than the commercial banking industry in
the United States because in Canada only a few large
banks dominate the industry, while in the United
States there are around 8,000 commercial banks.” Is
this statement true, false, or uncertain? Explain your
answer.
*4. Why did new technology make it harder to enforce
limitations on bank branching?
5. Why has there been such a dramatic increase in bank
holding companies?
*6. Why is there a higher percentage of banks with under
$25 million of assets among commercial banks than
among savings and loans and mutual savings banks?
however, repealed the Glass-Steagall Act, removing the
separation of these industries.
6. The regulation and structure of the thrift industry
(savings and loan associations, mutual savings banks,
and credit unions) parallel closely the regulation and
structure of the commercial banking industry. Savings
and loans are primarily regulated by the Office of
Thrift Supervision, and deposit insurance is
administered by the FDIC. Mutual savings banks are
regulated by the states, and federal deposit insurance is
provided by the FDIC. Credit unions are regulated by
the National Credit Union Administration, and deposit
insurance is provided by the National Credit Union
Share Insurance Fund.
Order Structure and Competition Assignment
7. With the rapid growth of world trade since 1960,
international banking has grown dramatically. United
States banks engage in international banking activities
by opening branches abroad, owning controlling
interests in foreign banks, forming Edge Act
corporations, and operating international banking
facilities (IBFs) located in the United States. Foreign
banks operate in the United States by owning a
subsidiary American bank or by operating branches or
agency offices in the United States.
QUIZ
7. Unlike commercial banks, savings and loans, and
mutual savings banks, credit unions did not have
restrictions on locating branches in other states. Why,
then, are credit unions typically smaller than the other
depository institutions?
*8. What incentives have regulatory agencies created to
encourage international banking? Why have they done
this?
9. How could the approval of international banking facilities (IBFs) by the Fed in 1981 have reduced employment in the banking industry in Europe?
*10. If the bank at which you keep your checking account
is owned by Saudi Arabians, should you worry that
your deposits are less safe than if the bank were
owned by Americans?
11. If reserve requirements were eliminated in the future,
as some economists advocate, what effects would this
have on the size of money market mutual funds?
*12. Why have banks been losing cost advantages in
acquiring funds in recent years?
13. “If inflation had not risen in the 1960s and 1970s, the
banking industry might be healthier today.” Is this
statement true, false, or uncertain? Explain your
answer.
*14. Why have banks been losing income advantages on
their assets in recent years?
15. “The invention of the computer is the major factor
behind the decline of the banking industry.” Is this
statement true, false, or uncertain? Explain your
answer