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Bank Management Week 1 Section 2 Fundamental Forces of Change in Banking
School of Business
Central South University
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Learning Objectives
Banks in the past
Goals and Functions of Bank Regulation
Organizational Form of the Banking Industry
Banking Business Models
Fundamental Forces of Change
Chinese Banking
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1. What were banks in the past?
mercial bank was defined as a firm that both accepted demand deposits(活期存款) and mercial loans (商业贷款)
Limitations on:
Geographic Scope
Products and Services
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What were banks in the past?
Historically, commercial banks have been the most heavily panies.
The Mcfadden Act of 1927
The Glass-Steagall Act of 1933
The Bank Holding Act of 1956
The Financial Modernization Act of 1999
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What were banks in the past?
They were the safest and most conservative business.
Although regulations limited opportunities and risks, they virtually guaranteed a profit.
Resulted in a banking system with a large number of smaller banks
Today, the traditional definition of a bank has been blurred by the introduction of new products and a wave of mergers.
Two major services (accepted demand deposits and mercial loans) are offered by many financial panies.
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Two areas of changes
1. Traditional role of banks as financial intermediaries declined
New products such as cash management accounts, mutual funds, commercial paper, and junk bonds have e more prevalent.
Banks have responded by accepting lower spreads, taking on more risk, and expanding their customer and product base.
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2. Evolution of banking into nontraditional roles
Expand into nontraditional areas and products to generate more fee e.
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 mercial banking, investment banking, and insurance for over 70 years
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2. Goals and Functions of Bank Regulation
Ensure the Safety and Soundness of Banks
Provide an Efficien