《商业银行管理》课后习题答案IMChap1

CHAPTER 1

AN OVERVIEW OF BANKS AND THEIR SERVICES

Goal of This Chapter: To help the reader discover the many roles banks play in the economy today and to highlight the powerful trends sweeping through the banking industry that are redefining the roles banks will play in the future. It is important to understand how recent trends in banking can affect a bank manager's decision making and why these decision makers must take these trends into account if their banks are to survive and prosper.

Key Terms Presented in This Chapter

Bank Financial Advisory Services

Nonbank Banks Cash-Management Services

Currency Exchange Equipment Leasing Service

Discounting Commercial Notes Insurance Policies Retirement Plans

Savings Deposits Security Brokerage

Demand Deposit Delegated Monitoring

Trust (fiduciary) Services Intermediation Role

Payment Role Agency Role

Policy Role Guarantor Role

Chapter Outline

I.Introduction: S ectors of the Economy Impacted by Banks

II. W hat Is a Bank?

A. D efined by the Functions It Serves and the Roles It Play:

B. N onbank Banks

C. D efined by the Government Agency That Insures Its Deposits

D. T he Financial Firm Offering the Widest Range of Financial Services Ill. T he Services Banks Offer the Public

A. S ervices Banks Have Offered Throughout History

1. C arrying Out Exchanges of Currency

2. D iscounting Commercial Notes and Making Business Loans

3. O ffering Savings Deposits

4. T he Safekeeping of Valuables and Certification of Value

5. S upporting Government Activities With Credit

6. O ffering Checking Accounts (Demand Deposits)

7. O ffering Trust Services

B. S ervices Bankers Have Developed More Recently

1. G ranting Consumer Loans

2. F inancial Advising

3. C ash Management

4. O ffering Equipment Leasing

5. M aking Venture Capital Loans

6. S elling Insurance Services

7. S elling Retirement Plans

8. O ffering Security Brokerage Investment Services

9. O ffering Mutual Funds and Annuities

10. O ffering Merchant Banking Services

11. C onvenience -- The Sum Total of all Bank Services

IV. T rends Affecting All Banks

A. S ervice Proliferation

B. R ising Competition

C. D eregulation

D. R ising Funding Costs

E. A n Increasingly Interest-Sensitive Mix of Funds

F. A Technological Revolution

G. C onsolidation and Geographic Expansion

H. G lobalization of Banking

I. Increased Risk of Failure and the Weakening of Government Deposit Insurance

Systems

V. A re Banks Dying?

VI. T he Plan of This Book

VII. S ummary

Concept Checks

1-1. W hat is a bank?

A bank should be defined by what it does, in this case, banks are generally those financial institutions offering the widest range of financial services.

1-2. Under current U.S. federal law what must a corporation do to qualify as a commercial bank?

Under U.S. law at the federal level, commercial banks must offer two essential services to qualify as banks for purposes of regulation and taxation, demand (checkable) deposits and commercial loans. Alternatively, U.S. financial institutions whose deposits are insured by the FOIC may be classified as banks.

1-3.Why are banks increasingly reaching out to become one-stop financial service conglomerates? Is this a good idea in your opinion?

There are two reasons that banks are increasingly becoming one-stop financial service conglomerates. The first reason is the increased competition from other types of financial institutions and the erosion of banks’ traditional service areas. The second reason is the Financial Services Modernization Act which has allowed banks to expand their role to be full service providers.