1. Please explain what is meant under a ‘dual banking system\'? When did it appe
ID: 2722303 • Letter: 1
Question
1. Please explain what is meant under a ‘dual banking system'? When did it appear in the U.S. and for what reasons?
2. Please describe the role of information technology in evolution of the financial industry.
3. Please describe the effect of the governmental safety net on the moral hazard and adverse selection problems in financial industry.
4. Give the examples of the main restrictions on competition among banks and then explain the logic of these restrictions, i.e., why they were imposed by regulators.
5. Please explain what a `mark-to-market accounting' and why it is argued that this practice has exacerbated the 2008 financial crisis.
Explanation / Answer
1. Dual Banking System
The dual Banking System is the system of banking in United States in which the State banks and the national banks are chartered and supervised at the different levels. National banks are supervised under federal law and standards.
2. The Information Technology plays a vital role in the evolution of the Financial Industry. It enables sophisticated Product Development, Better Market infrastructure, and helps financial intermediaries to reach the diversified markets. Internet has influenced the delivery channels of the bank as it is the important medium for delivery of the banking products and services. Now with the technolgy the customers can view the accounts, get the account statements and transfer funds.
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