Tài liệu Thị trường tài chính và các định chế tài chính_ Chapter 18 pdf

1 Chapter 18 Bank Regulation Financial Markets and Institutions, 7e, Jeff Madura Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved. 2 Chapter Outline  Background  Regulatory structure  Deregulation Act of 1980  Garn-St Germain Act  Regulation of deposit insurance  Regulation of capital  Regulation of operations  Regulation of interstate expansion  How regulators monitor banks  The “too-big-to-fail” issue  Global bank regulations 3 Background  The banking industry has become more competitive due to deregulation  Banks have more flexibility on the services they offer, the locations where they operate, and the rates they pay depositors  Banks have recognized the potential benefits from economies of scale and scope  Bank regulation is needed to protect customers who supply funds to the banking system  Regulators are shifting more of the burden of risk assessment to the individual banks themselves 4 Regulatory Structure  The U.S. has a dual banking system consisting of federal and state regulation  Three federal and fifty state agencies supervise the banking system  A federal or state charter is required to open a commercial bank  National versus state banks  Federal charters are issued by the Comptroller of the Currency  State banks may decide to become members of the Fed  35 percent of all banks are members of the Fed, comprising 70 percent of deposits 5 Regulatory Structure (cont’d)  Regulatory overlap  National banks are regulated by the Comptroller of the Currency, the Fed, and the FDIC  State banks are regulated by the state agency, the Fed, and the FDIC  Perhaps a single regulatory agency should be assigned the role of regulating all commercial banks and savings institutions 6 Regulatory Structure (cont’d)  Regulation of bank ownership  Commercial banks can be either independently owned or owned by a bank holding company  Most banks are owned by BHCs  BHCs have more potential for product diversification because of amendments to the Bank Holding Company Act of 1956 7 Deregulation Act of 1980  The Depository Institutions Deregulation and Monetary Control Act (DIDMCA) was enacted in 1980  DIDMCA has two categories of provisions:  Those intended to deregulate the banking industry  Those intended to improve monetary control  The main deregulatory provisions are:  Phaseout of deposit rate ceilings  Allowance of NOW accounts for all depository institutions  New lending flexibility for depository institutions  Explicit pricing of Fed services 8 Deregulation Act of 1980 (cont’d)  DIDMCA also called for an increase in the maximum deposit insurance level from $40,000 to $100,000 per depositor  Impact of DIDMCA  There has been a shift from conventional demand deposits to NOW accounts  Consumers have shifted funds from conventional passbook savings accounts to various types of CDs  DIDMCA has increased competition between depository institutions 9 Garn-St Germain Act of 1982  The Act:  Permitted depository institutions to offer money market deposit accounts (MMDAs), which have no interest ceiling  MMDAs are similar to money market mutual funds  MMDAs allow depository institutions to compete against money market funds in attracting savers’ funds  Permitted depository institutions to acquire failing institutions across geographic boundaries  Intended to reduce the number of failures that require liquidation 10 Regulation of Deposit Insurance  Federal deposit insurance has existed since the creation of the FDIC in 1933 as a response to bank runs  About 5,100 banks failed during the Great Depression  Deposit insurance has increased from $2,500 in 1933 to $100,000 today  Insured deposits make up 80 percent of all commercial bank balances  The FDIC is managed by a board of five directors, who are appointed by the President [...]... risk when applying the VAR model VAR is the estimated potential loss from trading businesses that could result from adverse movements in market prices  Banks typically use a 99 percent confidence level 18 Regulation of Capital (cont’d)  Use of the value-at-risk method to determine capital requirements (cont’d)  Testing   The validity is assessed with backtests in which the actual daily trading gains . 1 Chapter 18 Bank Regulation Financial Markets and Institutions, 7e, Jeff Madura Copyright. ©2006 by South-Western, a division of Thomson Learning. All rights reserved. 2 Chapter Outline  Background  Regulatory structure  Deregulation Act of 1980