OHCh10 - Chapter 10: Banking Industry: Structure and...

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Chapter 10: Banking Industry: Structure and Competition
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1 Historical Development of the Banking System Dual banking system: State Banks are chartered and supervised by the states. National banks are chartered and supervised by the federal govern- ment.
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2 Financial Innovation and the Evolution of the Banking Industry 2.1 Responses to Changes in Demand Conditions: Interest Volatility increase in the volatility of interest rates.
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The 1950s: 1.0% and 3.5% The 1970s: 4.0% and 11.5% The 1980s: 5% and more than 15% 2.1.1 Adjustable-Rate Mortgages In 1975, savings and loans in California began to issue adjustable-rate mortgages.
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Initial interest rates on adjustable-rate mortgages are lower than those on 2.1.2 Financial Derivatives Banks use &nancial derivatives such as futures contracts to deal with in- terest rate risk (Chapter 13).
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2.2 Responses to Changes in Supply Conditions: Informa- tion Technology Improvement in information technology (computer and telecommunication technology) 2.2.1 Bank Credit and Debit Cards Improved information technology made credit and debit cards successful.
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2.2.2
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OHCh10 - Chapter 10: Banking Industry: Structure and...

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