Question

In: Economics

3. Briefly describe four (or more) current or historical (within the past 50 years) significant differences...

3. Briefly describe four (or more) current or historical (within the past 50 years) significant differences in the U.S. banking system compared to the banking systems of rest of the industrialized world. (Note: these must be differences noted in class material. I do not want a bunch of small technical items from an online search). Money and Banking econ college course

Solutions

Expert Solution

Following the key differences:

1. Banking structure: Historically, majority of the banks in America were charted and regulated at both state and federal level. In 1990's, when these restrictions were removed, by year end 2001, there were more than 8000 insured commercial banks and about 1500 insured saving institutions in US. In contrast, with developed large economies like Japan, which had around 180 banks in 1998.

2. Less Concentration: the US banking industry is also less concentrated than banks in many developed countries. This was the main reason why housing bubbly led to near collapse of US banking during 2008 financial crisis.

3. Security and Insurance Powers: Securities and Insurance powers are largely limited in Key EU countries. Contrast, US banks are now permitted to offer security & insurance products.

4. Investments in and by Industrial firms: By large, US banks have limited power to invest in industrial firms than do banks in Canada, Germany, etc. Also, industrial firm investments in US banks have more limitations.


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