Exam 19: Banking Industry: Structure and Competition

The most important developments that have reduced banks' income advantages in the past twenty years include

Investment banking activities of the commercial banks were blamed for many bank failures. This led to

New computer technology has

The most important developments that have reduced banks' cost advantages in the past twenty years include

The McFadden Act of 1927

The principle underlying Treasury strips is that an investor will earn a higher interest rate when reinvestment risk is eliminated.

A financial innovation that enables banks to avoid the "tax" from reserve requirements by taking any balances above a certain amount in a corporation's checking account at the end of the business day and investing them in overnight securities that pay interest is called a ________.

In recent years, commercial banks have been allowed to

Bank holding companies that have begun to rival the money center banks in size but whose headquarters are not based in one of the money center cities are called superregional banks.

What are Treasury strips? What roles have reinvestment risk and information technology played in the development of this financial product?

The process in which people seeking higher interest rates take their money out of financial institutions is called ________.

Rising market interest rates in the 1960s and the 1970s, combined with regulated deposit rate ceilings,

To eliminate the abuses of the state-chartered banks, the ________ created a new banking system of federally chartered banks, supervised by the ________.

Economies of scope come from increasing the size of a given financial activity and economies of scale come from combining different activities to lower their costs.