Fluctuations in Banks' Market Share and Government Regulations Quiz

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How have banks evolved in the global financial system?

Banks have shifted from offering traditional services to becoming general financial-service providers.

What are some of the innovative financial products that banks are offering beyond traditional services?

Investment banking, insurance protection, financial planning, advice for merging companies, risk-management services

What distinguishes Money-Center Banks from Community Banks?

Money-center banks cover whole regions, nations, and continents, offer a wide menu of financial services, and face global competition. Community banks are smaller, serve local communities, offer personalized services, and have a narrower range of financial services.

How did the US define banks when deciding to regulate them?

A bank is any business offering deposits subject to withdrawal on demand and making loans of a commercial or business nature. Signup and view all the answers

What are some examples of services provided by Money-Center Banks?

Covering whole regions, nations, and continents, offering a wide menu of financial services, acquiring smaller businesses. Signup and view all the answers

What are some examples of services provided by Community Banks?

Serving local communities and towns, offering personalized services, having a narrower range of financial services. Signup and view all the answers

What is the legal basis for banking?

The legal basis for banking is the establishment of financial holding companies. Signup and view all the answers

What are the functions of money-center banks?

Money-center banks primarily focus on international financing and large-scale corporate lending. Signup and view all the answers

How do community banks differ from money-center banks?

Community banks serve local communities with traditional banking services, while money-center banks focus on international finance and large corporations. Signup and view all the answers

What are the services offered by banks' closest competitors?

Banks' closest competitors include security firms, credit unions, finance companies, and insurance companies, which offer services like lending, investment, and insurance. Signup and view all the answers

How has globalization impacted the banking industry?

Globalization has led to the global expansion of bank operations and the reduction of geographical barriers. Signup and view all the answers

What is the significance of convergence in shaping financial markets?

Convergence involves businesses expanding across industry lines to diversify their product offerings and broaden their sales base. Signup and view all the answers

What were the motives for change in banking and financial services as mentioned in the text?

a. Speculation and market collapse in real estate and mortgage markets. b. Innovation and invention of financial instruments. c. Weak monitoring, failure to control financial institutions. d. Failure of many commercial and investment banks especially in the US and Europe. Signup and view all the answers

What was the impact of government deregulation and then reregulation on banks?

Deregulation in the late 20th century lifted interest rate ceiling on deposits and loans, while reregulation post the 2007-2009 economic collapse restricted taking on new services and focused more on tracking systematic risk. Signup and view all the answers

How has the mix of funds in banks changed according to the text?

There is an increasing interest-sensitive mix of funds due to better educated and more interest-sensitive customers, requiring banks to be more competitive in the returns they offer and more sensitive to changing public preferences. Signup and view all the answers

What are some examples of technological changes mentioned in the text that have impacted the banking sector?

Electronic systems replacing labor-based production systems, virtual banking, and major technologies like ATMs, cell phones, point of sale, and credit cards. Signup and view all the answers

What was the reason behind the focus on dangers and tracking of systematic risk post the 2007-2009 economic collapse?

The collapse of the economy during 2007-2009 led to a tightening of government control on banks to restrict taking on new services and focus more on dangers and tracking systematic risk. Signup and view all the answers

How did the evolution of banks in the global financial system impact their operations?

The evolution towards technological change and automation made banks more capital-intensive, fixed-cost, and less labor-intensive, transforming the industry's operational dynamics. Signup and view all the answers