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Bank Mgt 5th Ed. Chap. 1-Modified

Bank mgt 5th ed chap 1 modified

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Unformatted text preview: Chapter 1 THE CHANGING NATURE OF BANKING IN THE UNITED STATES What Makes Managing A Commercial Bank Today A Challenge? Intense Competition Competition Rapid Rapid Technology Technology Changes Tough Economic Conditions Changing Regulatory Environment Role of Commercial Banking In U.S. Economy In INCOME TAXED BY GOVT. OR SPEND REMAINING INCOME SPEND MONEY FINANCIAL FLOWS OR SAVE REMAINING INCOME SAVE Figure 1.2 The Intermediation Process The Funds User (borrower) Pays bank 9% Funds Provider (depositor) Pays funds provider 4% Pays 4% “Spread” = 5% Spent for: Overhead Taxes Return to shareholders Commercial Banks Are Financial Intermediaries Most Bank Assets Are Financial In Nature Assets Are Primarily Money Owed By Such Assets Non-financial Economic Units Such As Households, Businesses & Governments Households, Commercial Banks Issue Contractual Commercial Obligations To Obtain Funds To Get Assets Assets Bank’s Capital Results From Stock Sales & Bank’s Accumulation Of Retained Earnings * Accumulation HISTORY OF BANKING:THE BEGINNING OF BANKING BEGINNING...
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