CHAP_01_An overview of banking sector

CHAP_01_An overview of banking sector - William Chittenden...

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Unformatted text preview: William Chittenden edited and updated the PowerPoint slides for this edition. AN OVERVIEW OF BANKING SECTOR Chapter 1 Key topics 1. Bank definitions 2. Bank regulation Goals of regulation Regulators Rationality of regulation 3. Bank functions 4. Bank services 5. Bank organization 6. Fundamental sources of changes 1. What is a bank? Definition by functions it serves Institutions involves in transferring funds from savers to borrowers ( financial intermediation ) & in paying for goods and services ( payment intermediation) Definition by services it offers to customers Accept deposits, make commercial loans, offer trust services, manage cash, etc. What is a bank? Necessity of a legal definition: Regulation purpose Banking service menu is expanding Other financial-service institution provide similar services What is a bank? Definition by legal basis for regulation US: any institution that could qualify for deposit insurance administered by the FDIC VN (Law of credit institution 2004) : a credit institution permitted to conduct all banking activities and other related business operations. What is a bank? Definition by legal basis for regulation VN: "Non-bank credit institution" is a credit institution permitted to engage in some banking activities as its regular business, but not permitted to receive demand deposits and to provide payment services. VN: "Banking activities" are monetary business activities and banking services, the regular operation of which is the receipt of deposits and use of that to extend credits, provide payment services. Financial service competitors of banks Savings associations Credit unions Money market funds Mutual funds (investment companies) Hedge funds Security brokers and dealers Investment banks Finance companies Financial holding companies Life and property-casualty insurance companies 2. Goals of bank regulation Ensure safety and soundness of banks protecting publics savings and confidence Provide an efficient and competitive financial system Provide monetary stability to achieve national broad economic goals Maintain the integrity of the payments system Ensure equal opportunity and fairness in the publics access to financial services Provide government with credit, tax revenues and other services Help sectors that have special credit needs Banking principal regulatory agencies (US) Federal Reserve System (FED) Comptroller of the Currency (OCC) Federal Deposit Insurance Corporation (FDIC) Department of Justice Securities and Exchange Commission (SEC) State Boards of Commissions Banking principal regulatory agencies (VN) State Bank of Vietnam (SBV) Deposit Insurance of Vietnam (DIV) Ministry of Finance (MOF) State Securities Commission of Vietnam (SSC) Why banks are closely regulated?...
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This note was uploaded on 05/23/2011 for the course FIN 360 taught by Professor Mcgill during the Spring '11 term at Neumann.

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CHAP_01_An overview of banking sector - William Chittenden...

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