Commercial Bank Administration Exam 1 - Quick Quiz Chap. 1-5
What key roles does the Federal Reserve System perform in the banking and financial system?
serves as a lender of last resort to stabilize the economy
How have bank failures influenced recent legislation?
Greater regulation on banks except in the instance of the financial services modernization act that allowed banks to offer a wider range of services in order to decrease business risk
Can you see any advantages to allowing interstate banking? What about potential disadvantages?
Helps promote local economies
How and why was the Dodd-Frank Regulatory Reform Act crafted to reduce systemic risk in the financial system, promote fair lending, protect consumers, and separate banks from key nonbank firms in an effort to restore public confidence?
It emphasized providing consumers with more complete and understandable language to convey service prices and avoid misleading information
What is happening to banking's share of the financial marketplace and why?
It is decreasing. Largest industry customers are finding other ways to finance. Perhaps banking is being "regulated to death"
What is the Glass-Steagall Act, and why was it important in banking history?
It separated commercial and investment banking as well as creating the FDIC
What trend in branch banking has been prominent in the United States in recent years?
New Branch expansion has slowed
Who charters new banks in the United States?
The banking commission of each state in conjunction with the Office of the Comptroller of the Currency (OCC)
What services does the Federal Reserve provide to depository institutions?
- Issuing wire transfers - Safe keeping securities - Issuing new securities from the US Treasury - Making loans through "discount windows" - Dispensing supplies of currency and coin - Clearing and collecting checks - Provides information about the welfare of institutions to the public and company managers
What powerful forces are shaping financial markets and institutions today?
- Service Proliferation - Rising Competition - Government Deregulation and then Reregulation - Crisis, Reform, and Change in Banking and Financial Services - An Increasingly Interest-Sensitive Mix of Funds - Technological Change and Automation - Consolidation and Geographic Expansion - Convergence - Globalization
What is a bank holding company?
A bank holding company is simply a corporation chartered for the purpose of holding the stock of at least one bank, often along with other businesses
What is a bank? How does a bank differ from most other financial-service providers?
A bank is any business offering deposits subject to withdrawal on demand and making loans of a commercial or business nature. However more recently they are able to provide FDIC insurance for their deposits.
What is the principal job performed by the FDIC?
Control money and credit conditions to promote economic stability
What relationship appears to exist between bank size, efficiency, and operating costs per unit of service produced and delivered?
Cost is lowered on economies of scale up to 200 million, then it seems to taper off.
What is monetary policy?
Ensuring the supply and cost of money and credit from the financial system contributes to the nations economic goals
How have banking and the financial-services market changed in recent years?
Financial serve markets are converging in terms of the services they offer, making it difficult to distinguish between one another.
Why are some banks reaching out to become one-stop financial-service conglomerates? Is this a good idea?
In order to obtain wider market shares.
What are the advantages of having a national bank charter? A state bank charter?
National - Prestige due to stricter standards State - generally easier and less costly
What are POS terminals?
Point - of - Sale terminals
Which businesses are banking's closest and toughest competitors? What services do they offer that compete directly with banks' services?
Saving Unions, Credit Unions, etc. They are starting to offer a whole range of financial services that makes it difficult to distinguish between banks and them.
Are there any significant advantages or disadvantages for holding companies or the public if these companies acquire banks or nonbank business ventures?
The principal advantage for holding companies entering nonbank lines of business is the prospect of diversifying sources of revenue and profits and reducing risk exposure
What trends are affecting the way banks and their competitors are organized today?
Usually becoming more complex over time and offering additional services
