320 $
© 2014 Pearson Canada Inc.$- Describe the financial innovations that were stimulated as a response to branching restrictions
in the U.S.?
Answer:
Bank holding companies: a bank holding company is a corporation that owns several different
companies. This form of corporate ownership has important advantages for banks. It has allowed
them to circumvent restrictive branching regulations, because the holding company can own a
controlling interest in several banks even if branching is not permitted. Also, these corporations
can engage in other activities related to banking such as the provision of investment advice, data
processing and transmission services, leasing, credit card services, and servicing of loans in other
states.
Automated teller machines: Banks realized that if they did not own or rent the ATM, but instead
let it be owned by someone else and paid for each transaction with a fee, the ATM would
probably not be considered a branch of the bank and thus would not be subject to branching
regulations.
Diff: 2 Type: SA Page Ref: 254 - 255
Skill: Recall
Objective List: 11.4 Compare Canadian banking system with the U.S. system
11.5 Competition Across All Four Pillars
The separation of the banking and other financial services industries was known as ____.
A) convergence
B) consolidation
C) the four-pillar approach
D) underwriting
Answer: C
Diff: 1 Type: MC Page Ref: 255
Skill: Recall
Objective List: 11.5 Understanding the four pillar approach to Canadian banking
The four-pillars were identified as ____.
A) banking, brokerage, trusts, and mutual funds
B) banking, brokerage, credit unions, and mutual funds
C) banking, brokerage, credit unions, and insurance
D) banking, brokerage, trusts, and insurance
Answer: D
Diff: 1 Type: MC Page Ref: 255
Skill: Recall
Objective List: 11.5 Understanding the four pillar approach to Canadian banking