slike bài giảng quản trị ngân hàng chương 1 an overview of banking sector

AN OVERVIEW OF BANKING SECTOR Chapter William Chittenden edited and updated the PowerPoint slides for this edition Key topics Bank definitions Bank regulation Goals of regulation  Regulators  Rationality of regulation  Bank functions Bank services Bank organization Fundamental sources of changes 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  Banking  Other purpose service menu is expanding 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 Goals of bank regulation  Ensure safety and soundness of banks protecting       public’s 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 public’s 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) Fundamental forces of change  Deregulation/reregulation  Financial innovation  Securitization  Globalization  Advances in technology Fundamental forces of change: Role of Regulation  Regulatory Dialectic  Process of regulation, market response, and reregulation  Financial Innovation Fundamental forces of change: Increased Competition  For Deposits  Interest rate ceilings and inflation  For Loans  Commercial  Junk paper bonds  Credit scoring  Credit derivatives Fundamental forces of change: Off-Balance Sheet Activities  Loan commitments  Loan guarantees  Standby letters of credit  Interest rate swaps  Futures, forwards & options  Leases Fundamental forces of change: Impact of Nonbank Competition  Captive Finance Companies  A subsidiary whose purpose is to provide financing to customers buying the parent company's product (e.g General Motors Acceptance Corporation (GMAC))  General Finance Companies  Fund their loans by issuing commercial paper and long-term bonds Their cost of funds is higher than a bank’s, but they charge higher rates Fundamental forces of change: Competition for Payments Services  Credit Cards  Debit Cards  Prepaid Cards  CHIPS  ACH Fundamental forces of change: Competition for Other Bank Services  Trust services  Brokerage services  Data processing  Real estate appraisal  Credit life insurance  Personal financial consulting Fundamental forces of change: Change Investment Banking  National full-line firms  Investment banking firms  Underwriter  Underwriter syndicate  Broker versus Dealer Fundamental forces of change: Deregulation and Re-regulation  Deregulation  Eliminating existing regulations  Reregulation  Implementing activities new restrictions on banking Fundamental forces of change: Financial Innovation  Innovation may be caused by a bank wanting to:  Enter into a new geographic market  Enter into a new product market  Deliver services less expensively  etc Fundamental forces of change: Securitization  Securitization  The process of converting assets into marketable securities  Mortgages  Credit card receivables Fundamental forces of change: Globalization  Globalization  Is the evolution of markets and institutions where geographic boundaries not restrict financial transactions or competition Fundamental forces of change: Technology  Advances in Technology  Advances in technology increase the scope of the global market place and competition  Advances in technology also reduce the need for an intermediary by providing easy access to information  Increasing competition by reducing the cost of being an information intermediary Problems You recently graduated from university with a business degree and accepted a position at a major corporation earning more than you could have ever dreamed You want to Open a checking account for transaction purposes Open a saving account for emergencies Invest in an equity mutual fund for that far-off future called retirement See if you can find more affordable auto insurance, and Borrow fund to buy a condo given you uncle said he was so proud of your grades and he wanted to give $20,000 for a down payment Make five lists of financial service firms that could provide you with each of these services AN OVERVIEW OF BANKING SECTOR Chapter William Chittenden edited and updated the PowerPoint slides for this edition ... Offices Ave # of Branches/ U.S Bank 19 34 14 ,14 6 2,985 17 ,13 1 0. 21 1970 13 , 511 21, 810 35,3 21 1. 61 1982 14 ,4 51 39,784 54,235 1. 75 2007 7,2 41 77,947 85 ,18 8 10 .76 From Table 3-2; Source: FDIC Organizational... 3-36 Organizational form of the banking industry What trend in branch banking has been prominent in the U.S in recent years? Year # of Bank Main Offices # of Branch Offices Total of U.S Bank Offices... one office  One of the oldest kinds of banks  New banks are generally unit banks until can grow and attract more resources Organizational form of the banking industry  Branch banking  Offer