Banking in America
Banking in America refers to the system of financial institutions that provide services such as accepting deposits, making loans, and facilitating payments. It is regulated by various federal and state agencies to ensure stability and protect consumers. The history of banking in America is marked by periods of innovation, regulation, and crisis, shaping the country's economic landscape.
5 Key excerpts on "Banking in America"
eBook - ePubThe Bank Credit Analysis Handbook
A Guide for Analysts, Bankers and Investors
- Jonathan Golin, Philippe Delhaise(Authors)
- 2013(Publication Date)
- Wiley(Publisher)
...Some of these differences relate to the structure of a bank’s financial statements as compared with a nonfinancial entity. Others have to do with the role of banks within a jurisdiction’s financial system and their impact on the local economy. The banking sector is among the most tightly regulated of all industries worldwide. This fact alone means that the scope, character, and effectiveness of the regulatory apparatus will inevitably affect the performance and financial condition of institutions that come within its ambit. Consequently, consideration of the adverse and beneficial consequences of existing regulations, and proposed or promulgated changes, will necessarily assume a higher profile than is normally the case in connection with nonfinancial companies. The reason that banks are heavily regulated is in large part attributable to the preeminent role they play within the financial markets in which they operate. As crucial components within a national payment system and the extension of credit within a region or country, their actions and health inevitably have a major impact on the climate of the surrounding economy. Consequently, banks are more important than their apparent size, measured in terms of revenue generation and employment levels, would suggest. It should not be surprising therefore that governments around the world take a keen interest in the health of the banks operating within their borders, and, supervise them to a far greater degree than they do nonfinancial enterprises. In contrast, nonfinancial firms, with a few exceptions, are lightly regulated in most jurisdictions, and governments generally take a hands-off policy toward their activities. In most contemporary market-driven economies, if an ordinary company fails, it is of no great concern. This is not so in the case of banks...
eBook - ePubContemporary Economics
An Applications Approach
- Robert Carbaugh(Author)
- 2016(Publication Date)
- Routledge(Publisher)
...The other half was in “circulation.” However, many of these coins were apparently being hoarded, as few of them were observed in day-to-day transactions. According to the adage, money makes the world go around. As far back as 300 B.C.E., Aristotle maintained that everything must be assessed in money because this allows people to exchange their services and so makes society possible. Indeed, money is an integral part of our everyday life. In this chapter, we will examine money and the role that it plays in the economy. We will focus on the nature of money, the operation of our banking system, and the process by which money is created. Throughout this chapter, we will refer to the Federal Reserve System, which is the central banking system of the United States. The Federal Reserve supplies banks 1 with currency, operates a nationwide clearing mechanism for checks, serves as a lender of last resort for troubled banks, supervises and examines member banks for safety and soundness, provides checking accounts for the U.S. Treasury, issues and redeems government securities, and conducts monetary policy for the nation. We will discuss the nature and operations of the Federal Reserve System more fully in the next chapter. 1 The U.S. economy has an array of banks, including commercial banks, savings and loan associations, mutual savings banks, and credit unions. We call these depository institutions : They accept deposits from people and provide checking accounts that are part of the money supply. The Meaning of Money When you go to Pizza Hut to purchase a dinner, you obtain something of value—a pizza and a soft drink. To pay for these items, you might hand the waiter some cash or a personal check. The restaurant is happy to accept either of these pieces of paper, which, in themselves are worthless...
eBook - ePubCulture, Conduct and Ethics in Banking
Principles and Practice
- Fred Bell(Author)
- 2019(Publication Date)
- Kogan Page(Publisher)
...In Europe, the large banks in many countries have embraced the ‘bancassurance’ model, through which banks create and distribute not only banking products but also life assurance, general insurance, factoring and other services. The United States has traditionally had a more fragmented banking industry, brought about by various legacy laws. For example, until the 1980s it was not permitted for banks to open branch offices in many states, which prompted many of the larger banks to open offices outside the United States to seek organic expansion elsewhere. The barriers to entry in banking have always been high given the need to demonstrate robust structures, providing sufficient capital buffers, ensuring regulatory compliance is in place and providing strong security protocols over data and payments. However, as noted above, challenger banks have emerged and are being encouraged by the authorities to inject competition into the market. Increasingly accessible and powerful technology is also playing a key role in supporting competition from new players. It’s generally recognized that the traditional universal banks, with their complex processes and structures, aged computing systems, multiplicity of products and high-cost bases, may be less nimble in meeting the range of new challenges, including: new market entrants; customer expectations re extended/continuous access to banking services; use of technology to enable smart access to services; pricing transparency; fraud (particularly online) and money-laundering prevention; stakeholder power; regulatory change (and a generally increasing regulatory burden). Innovation in banking From the earliest banking activities, from the evolution of goldsmiths into banks, the financial sector has continuously innovated, both in terms of the range of products and services offered through to the mechanisms and channels through which they are offered and sold to customers...
eBook - ePubThe Digital Banking Revolution
How Fintech Companies are Transforming the Retail Banking Industry Through Disruptive Financial Innovation
- Luigi Wewege, Michael C. Thomsett(Authors)
- 2019(Publication Date)
- De Gruyter(Publisher)
...Chapter 2 Overview of Banking Before we set forth the reasons why traditional retail banks are facing extinction, readers must understand the historical underpinnings influencing the evolution of the banking system, and the extent to which these factors give insight into the current structure and organization of banks. The past provides lessons for the present and guidance for the future. Although it is not possible to predict the future, it is possible, with a perspicacious eye, to discern the complex interaction of historical forces and factors producing favorable conditions. These have enabled a select few people to identify niches for their banks and to set the finance industry on a new and previously unimagined trajectory. Brief History of Banking Today’s banking system is the latest in a long evolution of financial services. The earliest known practices of banking as attested to by written standards originated in Babylonia around the second millennium BC. These standards were in part formal laws, enshrined in the Code of Hammurabi, and transactions were apparently similar to the practices of modern-day banking. However, in that ancient agrarian society deposits were not of capital but of grain or other crops, cattle, and precious metals. The fundamental concepts underlying the modern-day banking system were evident in these primitive arrangements. Loans were advanced, deposits were received, and borrowers paid interest. Similar rudimentary banking arrangements were prevalent in ancient Egypt, having originated in the need for grain to be stocked in warehouses of the centralized state. Depositors used written orders for taking out specific quantities of deposited grains. This system proved so effective that it became self-sustaining, spawning parallel banking practices with respect to precious metals and coinage. The well-documented history of banking in Italy traces back to the medieval cities of Venice, Florence, and Genoa...
eBook - ePub- John Roscoe Turner(Author)
- 2019(Publication Date)
- Routledge(Publisher)
...Banks are institutions which deal in credit; they make their income by selling their credit to customers. This credit is more convenient than primary money, and is so universally acceptable as to become the common medium of exchange in the business world. A bank sells its credit by simply giving its promise to pay. The written evidence of an individual's promise to pay is a promissory note; the written evidence of a bank's promise to pay takes the form of a bank-note or an entry in what is known as a "pass-book." But why such confidence in a bank that its mere promise comes to serve as the common medium of exchange throughout the business world? This confidence rests upon so many pillars of support that a mere, enumeration of them becomes tedious. They are: the bank's paid-up capital; its surplus and undivided profits; its reputation and good-will; the character of its loans and securities held; the liability of stockholders; the prestige of its officers, directors, and stockholders; and, finally, the people's confidence is strongly supported by faith in the control and inspection by expert official examiners. Banks perform various functions useful to their customers; some of these are performed by institutions other than banks. They maintain deposit vaults, change money, sell securities, and serve as trustees. But the one essential and true banking function is that of dealing in credit. 9. Banks as Reservoirs of Capital. A bank may be likened to a reservoir from which capital (purchasing power) flows in the form of credit. Surplus funds flow into the bank and become the basis of credit issues, which flow out to the places where capital is needed. Thus banks become equalizing agencies of finance throughout the community. Small driblets of idle capital are collected by the banks and consolidated into huge funds capable of meeting the demands for large capital on the part of great industrial establishments...
