ECO 301 Lecture Notes - Lecture 19: National Credit Union Share Insurance Fund, Eurodollar, Investment Banking
6 Dec 2016
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Chapter 11: banking industry structure and competition. Bank of north america, chartered in 1782. National bank act of 1863 creates new banking system of federally chartered banks: office of the comptroller of the currency, dual banking system. Federal reserve system is created in 1913. Federal reserve and state banking authorities: state banks that are members of the federal. Fdic: insured state banks that are not fed members. State banking authorities: state banks without fdic insurance. Fi(cid:374)a(cid:374)cial i(cid:374)(cid:374)o(cid:448)atio(cid:374) a(cid:374)d the gro(cid:449)th of the (cid:862) hado(cid:449) ba(cid:374)ki(cid:374)g yste(cid:373)(cid:863) Financial innovation is driven by the desire to earn profits. A change in the financial environment will stimulate a search by financial institutions for innovations that are likely to be profitable: financial engineering. Responses to changes in demand conditions: interest-rate volatility. Adjustable-rate mortgages: flexible interest rates keep profits high when rates rise, lower initial interest rates make them attractive to home buyers.
