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In a ____ banking system, commercial banks are allowed to hold equity stakes in
commercial firms.
A) British
B) German
C) Japanese
D) North American
Answer: C
Diff: 2 Type: MC Page Ref: 258
Skill: Recall
Objective List: 11.5 Understanding the four pillar approach to Canadian banking
A major difference between the British-style and Japanese banking systems is that ____.
A) British-style banks are allowed to hold substantial equity stakes in commercial firms, whereas
Japanese banks cannot
B) Japanese banks are allowed to hold substantial equity stakes in commercial firms, whereas
British-style banks cannot
C) bank holding companies are illegal in British-style banks
D) Japanese banks are usually organized as bank holding companies
Answer: B
Diff: 3 Type: MC Page Ref: 257 - 258
Skill: Recall
Objective List: 11.5 Understanding the four pillar approach to Canadian banking
What is the international experience on the separation of banking and other financial services
industries throughout the world? What are the main frameworks?
Answer:
Canada and the U.S.: Not many other countries after the Great Depression followed them in
separating the banking and other financial services industries. This separation was the most
prominent difference between banking regulation in Canada and the U.S. versus the rest of the
world.
The frameworks
British: This framework is found also in the U.K., Australia, Canada and now the U.S. In this
framework banks engage in in securities underwriting but it differs from the German in three
ways: separate legal entities are common, bank equity holdings and combinations of banking and
insurance firms are less common.
Japanese: The main difference between the Japanese and British frameworks is that Japanese
banks are allowed to hold substantial equity stakes in commercial firms.
Diff: 3 Type: SA Page Ref: 257 - 258
Skill: Recall
Objective List: 11.5 Understanding the four pillar approach to Canadian banking