The purpose of this chapter is: To look at the sources and consequences of financial fragility focusing on the banking sector, to look at the institutional safeguards the government has built into the system in an attempt to avert financial crises, to study the regulatory and supervisory environment of the banking industry, to examine emerging approaches to regulation that focus on the safety of the financial system rather than on individual institutions. | Chapter 14 The Commercial Banking Industry: Structure, Products, & Management Learning Objectives To understand how important commercial banks are to the functioning of a modern economy and financial system. To explore the structure of the United States’ banking industry. To learn about bank financial statements and how to read them. To see how banks create and destroy money and credit, and why this activity is vital. Introduction The dominant privately owned financial institution in the . and in the economies of most major countries is the commercial bank. This institution offers the public both deposit and credit services, as well as a growing list of newer and more innovative services, such as investment advice, security underwriting, selling insurance, and financial planning. The Structure of . Commercial Banking Number of Operating Commercial Banks in the . at Year-end 2003 Source: Federal Deposit Insurance Corporation A Trend Toward Consolidation One of the most . | Chapter 14 The Commercial Banking Industry: Structure, Products, & Management Learning Objectives To understand how important commercial banks are to the functioning of a modern economy and financial system. To explore the structure of the United States’ banking industry. To learn about bank financial statements and how to read them. To see how banks create and destroy money and credit, and why this activity is vital. Introduction The dominant privately owned financial institution in the . and in the economies of most major countries is the commercial bank. This institution offers the public both deposit and credit services, as well as a growing list of newer and more innovative services, such as investment advice, security underwriting, selling insurance, and financial planning. The Structure of . Commercial Banking Number of Operating Commercial Banks in the . at Year-end 2003 Source: Federal Deposit Insurance Corporation A Trend Toward Consolidation One of the most important structural changes affecting the banking industry in recent years is the drive toward consolidation of industry assets into fewer, but larger, banking organizations. Branch Banking The drive toward consolidation of banks into larger organizations is most evident in the long-term shift toward branch banking. Many of the nation’s largest banks have followed their customers to distant markets across the nation through branching and mergers, so as to protect their sources of funds and their earnings. Bank Holding Companies Paralleling the rapid growth of branch banking has been the growth of bank holding companies – corporations organized to acquire and hold the stock of one or more banks. Holding companies have become the predominant bank organizational form because of their advantages in raising capital, spreading out their risk exposure, and allowing entry into new business opportunities. Banks and Bank Holding Companies The Top Banks and Bank Holding Companies in the United .
