Bank Management, 5th edition.
Timothy W. Koch and S. Scott MacDonald
Copyright © 2003 by South-Western, a division of Thomson Learning
银行经营环境分析
Chapter 2
What makes a bank ‘special?’
LAW ENVIRONMENT
 The implementation of THREE ACTS:
The Glass-Steagall Act :commercial banking,
investment banking, and insurance(分业经营).
 The Bank Holding Act: determined activities closely
related to banking and limited the scope of bank
activities （业务限制）.
 The McFadden Act :limited the geographic market of
banking (intra- or inter-state)（分支机构设置）.
 Result:
◆a large number of smaller banks;
◆limited in the scope of products and services offered;
◆limited in the geographic areas covered by banks.

The banking industry :Consolidating and
Diversifying
 The bank has been dramatically expanded the
scope of activities that banks engage in and where
products and services are offered.



accepted demand deposits
made commercial loans.
offered by many financial services companies:
including commercial banks, savings banks, credit
unions, insurance companies, investment banks,
finance companies, retailers, and pension funds.
 products and services are NOT LIMITED in
geographic markets and financial company.
Competition for financial products and
services offer
 largest banks.
 The United States currently has several banks that
operate in different regions and products
Increased competition
 Competition also means geography no
longer limits a financial institution’s trade area or the
markets in which it competes（银行之间发生了力量的相
对变化，强的更强，弱的更弱）.
 Deposit competition(不仅减少了银行吸收存款的数量，而
且提高了银行吸收存款的成本)
 Loan competition（不仅减少了优质客户，而且降低了贷
款收益）
 Non-interest service competition（各种机构的混业经营，
使银行的传统业务受到了严重冲击）
Five fundamental forces have
transformed the financial services
market
1.
2.
3.
4.
5.
Deregulation/re-regulation
Financial innovation
Securitization
Globalization
Advances in technology.
The latter factors actually represent
responses to deregulation and
re-regulation.
The RESULTS from repeal of the
Glass-Steagall Act via the Financial
Services Modernization Act (GrammLeach-Bliley Act of 1999).
 The Gramm-Leach-Bliley Act effectively eliminates
the majority of the remaining restrictions that have
separated commercial banking, investment banking
and insurance industries for over
50 years.
 The Glass-Steagall Act shaped the structure,
products and business（这是关键，促进了混业经营）
models of the banking industry for
the later half of the 20th century.
The fundamental forces of change
… increased competition
 Competition for deposits
 Competition for loans
 Competition for payment services
 Competition for other financial services
Competition for deposits
 High inflation abruptly ended the guaranteed spread between
asset yields and liability costs in the late 1970s. （通货膨胀的
出现改变了稳定的利差，利率风险在银行中有显著的影响）
 In 1973 several investment banks created money market
mutual funds (MMMFs).
 Without competing instruments, MMMFs increased from
$10.4 billion in 1978 to almost $189 billion in 1981.
 Congress passed legislation enabling banks and thrifts to
offer similar accounts including money market deposit
accounts (MMDAs) and Super NOWs.
需要注意的是，金融创新的一个重要动机就是规避影响银行发展的相
关法规。所以本次金融危机众多学者认为是金融创新缺乏监管，从
这来看恰恰相反，金融创新本身就是要规避监管。
Competition for loans
 Loan yields fell relative to borrowing costs,
as lending institutions competed for a
decreasing pool of quality credits.
 High loan growth also raises bank capital
requirements.
 Junk bonds, commercial paper, auto finance
companies, credit unions, and insurance
companies compete directly for the same
good quality customers.
Competition for loans (continued)
 As bank funding costs rose, competition for
loans put downward pressure on loan yields
and interest spreads.
 Prime corporate borrowers have always had
the option to issue commercial paper or
long-term bonds rather than borrow from
banks.
 Because the Glass-Steagall Act prevented
commercial banks from underwriting
commercial paper, banks lost corporate
borrowers, who now bypassed them by
issuing commercial paper at lower cost.
Competition for loans (continued)
 The competition for loans comes in many
forms:



Commercial paper
Captive automobile finance companies
Other finance companies
 The development of the junk bond market
extended loan competition to medium-sized
companies representing lower-quality
borrowers.（从来不考虑的低质量客户也必须考
虑）
 The growth in junk bonds reduced the pool of
good-quality loans and lowered risk-adjusted
Today, different size banks generally
pursue different strategies.
 Small- to medium-size banks continue to
concentrate on loans but seek to strengthen
the customer relationship by offering
personal service.（零售业务快速发展）
 These same banks have generally
rediscovered the consumer loan.
 The largest banks, in contrast, are looking
to move assets off the balance sheet.

Regulatory capital requirements and the new
corporate debt substitutes often make the
remaining loans too expensive and too risky.
Loan concentrations:
Consumer and commercial credits
Credit Risk Diversification
Commercial borrowers
Consumer loans
80.0%
70.0%
Percent of loans
60.0%
69%
67% 65%
64% 62%
60% 58%
59% 60% 60% 59%
57% 55% 55% 57% 57%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
36% 38%
35%
31% 33%
43% 45% 45% 43% 43%
42%
41% 40% 40% 41%
40%
Captive automobile finance companies
 The three largest U.S. automobile
manufacturers as well as most foreign
automobile manufactures are aggressively
expanding in the financial services industry
as part of their long-term strategic plans.
 这种新的金融机构本身对商业银行产生了严重冲
击
Although cash remains the dominate form
of payment, the average payment size of
cash is the smallest （结算方式发生了变革）
Volume of Transactions
% of
Cashless Growth:
% Total Payments 19952000
2000
2000
2000
550,000 82.3% #N/A
69,000 10.3%
58.2%
1.8%
Cash
Cheques issued
Electronic Transactions:
ACH
6,900
ATM
13,200
Credit Card
20,000
Debit Card
9,275
Total retail electronic
49,375
Chips
58
Fed Wire
108
Total wholesale electronic 166
Total Electronic
49,541
1.0%
2.0%
3.0%
1.4%
7.4%
0.0%
0.0%
0.0%
7.4%
5.8%
11.1%
16.9%
7.8%
41.7%
0.0%
0.1%
0.1%
41.8%
14.6%
6.4%
6.0%
42.1%
10.7%
2.6%
7.3%
5.5%
10.7%
Value of Transactions
% Growth: Average
Total 1995- Transaction
1995
2000
2000 2000 Size 2000
#N/A
2,200,000 0.3%
$
4.00
73,515,000 85,000,000 10.9%
2.9% $ 1,231.88
12,231,500 20,300,000
656,600
800,000
879,000 1,400,000
59,100
400,000
13,826,200 22,900,000
310,021,200 292,147,000
222,954,100 379,756,000
532,975,300 671,903,000
546,801,500 694,803,000
2.6%
0.1%
0.2%
0.1%
2.9%
37.4%
48.6%
85.9%
88.8%
10.7% $ 2,942.03
4.0% $
60.61
9.8% $
70.00
46.6% $
43.13
10.6% $ 463.80
-1.2% $ 5,037,017
11.2% $ 3,516,259
4.7% $ 4,047,608
4.9% $ 14,025
Competition for other bank services
 Banks and their affiliates offer many
products and services in addition to
deposits and loans.







Trust services
Brokerage
Data processing
Securities underwriting
Real estate appraisal
Credit life insurance
Personal financial consulting
“Non-bank” activities of banks
…the Gramm-Leach-Bliley Act.（混业经营的规范）
 Since the Glass-Steagall and Bank Holding
Company acts, banks could not directly
underwrite securities domestically.
 Today, a bank can enter this line of business
by forming a financial holding company
through provisions of the Gramm-LeachBliley Act.


A financial holding company owns a bank or
bank holding company as well as an
investment subsidiary.
The investment subsidiary of a financial
holding company is not restricted in the
amount or type of investment underwriting
engaged in.
Investment banking




already offer many banking services to prime
commercial customers and high net worth
individuals and
sell a wide range of products not available
through banks.
can compete in any geographic market
without the heavy regulation of the FRS,
FDIC, and OCC.
earn extraordinarily high fees for certain
types of transactions and can put their own
capital at risk in selected investments.
Investment banking (functions)
1.
2.
3.
underwriting public offerings of new
securities
trading existing securities
advising and
financing mergers
and acquisitions
Deregulation and re-regulation
 Deregulation is the process of eliminating
regulations, such as the elimination of
Regulation Q (interest rate ceilings imposed
on time and demand deposits offered by
depository institutions.)
 Deregulation is often confused with
reregulation, which is the process of
implementing new restrictions or modifying
existing controls on individuals and
activities associated with banking.
Efforts at deregulation and reregulation generally address:
 Pricing issues
 removing price controls on the maximum
interest rates paid to depositors and the rate
charged to borrowers (usury ceilings).
 Allowable geographic market penetration
 The Riegle-Neal Interstate Banking and
Branching Efficiency Act of 1994 has
eliminate branching restrictions.
 New products and services
 Gramm-Leach-Bliley Act of 1999 has
dramatically expanded the banks’ product
choices; i.e., insurance, brokerage services,
and securities underwriting.
Financial innovation
 Financial innovation is the catalyst behind
the evolving financial services industry.
 Innovations take the form of new securities
and financial markets, new products and
services, new organizational forms, and new
delivery systems.
 Regulation Q brought about financial
innovation as depository institutions tried to
slow disintermediation.
Financial innovation (continued)
 Banks developed new vehicles to compete
with Treasury bills, money market mutual
funds, and cash management accounts.
 Regulators: ally responded by imposing
marginal reserve requirements against the
new instrument, raising the interest rate
ceiling, and then authorizing a new deposit
instrument.
 Recent innovations : new futures, options,
options-on-futures, and the development of
markets for a wide
range of securitized assets.
Response of banks
 One competitive response to asset quality
problems and earnings pressure has been
to substitute fee income for interest income
by offering more fee-based services.
 Banks also lower their capital requirements
and reduce credit risk by selling assets and
servicing the payments between borrower
and lender rather than holding the same
assets to earn interest.
 This process of converting assets into
marketable securities is called securitization.
Securitization
 Securitization is the process of converting
assets into marketable securities.
 It enables banks to move assets off-balance
sheet and increase fee income.
 It increases competition for standardized
products such as:

mortgages and other credit-scored loans
 Eventually lowers the prices paid by
consumers by increasing the supply and
liquidity of these products.
The objectives behind securitization
include the following:
 Free capital for other uses
 Improve ROE via servicing income
 Diversify credit risk
 Obtain new sources of liquidity
 Reduce interest rate risk
Off-balance sheet activities,
asset sales and Enron
 Enron engaged in questionable activities including
not reporting losses from business activities that
the firm inappropriately moved off-balance sheet.

Enron was thus able to hide losses on the business
activities and/or use its off-balance sheet activities to
artificially inflate reported earnings.
 Many banks also enter into agreements that do not
have a balance sheet reporting impact until a
transaction is effected.



An example might be a long-term loan commitment
to a potential borrower.
Until the customer actually borrows the funds, no
loan is reported on the bank’s assets.
Obviously, off-balance sheet positions generate
noninterest income but also entail some risk as the
bank must perform under the contracts.
Globalization
 The gradual evolution of markets and
institutions so that geographic boundaries
do not restrict financial transactions.
 Financial markets and institutions are
becoming increasingly global in scope.
 Firms must recognize that businesses in
other countries as well as their
own are competitors, and that
international events affect
domestic operations.
Increased consolidation
 The dominant trend regarding the structure
of financial institutions is that of
consolidation.
 With the asset quality problems of Texas
banks in the 1980, regulators authorized
acquisitions by out-of-state banks.
 By 1998, effectively all interstate branching
restrictions had been eliminated

this has lead to
consolidation frenzy
in which we have
almost half as many
banks as compared
to the 1980’s
The later half of the 1990s saw not only a
large number of bank mergers but also
several of the largest bank consolidations:
 Citicorp merges with Travelers
 Chase Manhattan acquires Chemical Banking
 Chase Manhattan acquires J.P. Morgan
 Mellon Bank acquires Dreyfus
 NationsBank acquires BankAmerica
 Bank of New York acquires Irving Bank Corp
 Fleet Financial Group acquires BankBoston
 Bank One acquires First USA
 Southern National acquires BB&T Financial
The removal of restrictive branching laws
as well as “merger mania” of the late 1990s
has dramatically reduced the number of
banks.
 The primary factor leading the reduction in
the number of banks from a high of 14,364
in 1979 to about 8,000 at the beginning of
2002 can be attributed to the removal of
branching restrictions provided by RiegleNeal Interstate Banking and Branching
Efficiency Act of 1994
Most of the legal and regulatory
differences which have historically
separated various types of depository
institutions are gone.
 Banks now compete with:
 traditional depository institution


brokerage firms


local commercial bank, savings bank, or credit unions
such as Charles Schwab or Merrill Lynch,
nonbank firm

such as GE Capital, State Farm Insurance, and AT&T.
 All of these firms compete for business, pay and
charge market interest rates, and are generally not
limited in the scope of products and services they
offer or the geographic regions where they offer
these products.
我国银行业的发展历程（改革开放以
来）引用 成思危




体系重建阶段（1977—1986年）
扩大发展阶段（1987—1996年）
深化改革阶段（1997—2002年）
改革攻坚阶段（2003年至今）
体系重建阶段（1977—1986年）
 1978年3月中国人民银行总行恢复了其独立的部级单位的地位，但
其所担负的商业银行与中央银行的双重职能并未改变。1983年9月
17日，国务院发文明确规定中国人民银行专门行使中央银行的职能。
 形成四大专业银行（主管农村金融业务的中国农业银行；主管外贸
信贷和外汇业务的中国银行 ；主管长期投资和贷款业务的中国人民
建设银行 ；负责接受国际金融机构贷款及其他资金转贷给国内企业
的中国投资银行 ；中国工商银行，接办中国人民银行原有的信贷和
储蓄等商业银行业务 ）。
 1985年人民银行出台了专业银行业务可以适当交叉和“银行可以选
择企业、企业可以选择银行”的政策措施，鼓励四家专业银行之间
开展适度竞争 。
扩大发展阶段（1987—1996年）
 1987年中国人民银行提出要建立以中央银行为领导，各类银行为主
体、多种金融机构并存和分工协作的社会主义金融体系。
 1994年相继成立了专门办理政策性信贷业务的国家开发银行、中国
进出口银行及中国农业发展银行，行使政策性银行功能。
 1995年5月10日，《中华人民共和国商业银行法》公布，明确了商
业银行的性质、地位及与其他金融市场主体之间的关系。
 其他类型的银行迅速发展。交通银行、中信实业银行、招商银 行、
深圳发展银行、烟台住房储蓄银行、蚌埠住房储蓄银行、福建兴业
银行、广东发展银行、中国光大银行、华夏银行、上海浦东发展银
行、海南发展银行、民生银行等12家股份制全国性银 行 。邮政储
蓄遍布全国 。在16个城市进行在城市信用社的基础上组建城市合作
银行的试点 。
深化改革阶段（1997—2002年）
 中国政府不断推进商业银行的改革，加强对商业
银行的监管。
 商业银行转变经营机制、健全管理制度、变更业
务范围、调整营业网点。
改革攻坚阶段（2003年至今）
 改革的重点已经转移到制度（包括体制和机制）
的变革，向建立现代金融企业的方向迈进。
 银监会于2003年4月28日正式挂牌成立，行使原
由中国人民银行行使的银行监督管理职权。
 商业银行股份制改造，整体上市
 改善公司治理和内部控制