Bank Management & Financial Services 9th Edition by Peter Rose solution manual

 
A financial department store is an institution where banking, insurance, and security brokerage services are unified under one roof. This recent trend to unify banking, insurance, and security
brokerage services is often referred to as universal banking. The impressive array of services offered and the service delivery channels used by modern financial institutions have added up to greater convenience for their customers, possibly meeting all their financial-service needs at one location.

 
1-8.   Why do banks and other financial intermediaries exist in modern society, according to the theory of finance?
 
The traditional view of banks as financial intermediaries sees them as simultaneously fulfilling the financial-service needs of savers (surplus-spending units) and borrowers (deficit-spending units), providing both a supply of credit and a supply of liquid assets. A newer view sees banks as delegated monitors who assess and evaluate borrowers on behalf of their depositors and earn fees for supplying monitoring services. Banks also provide a service of dividing up financial instruments into smaller units which would be readily affordable to millions of people. Banks accept risky loans from borrowers while issuing low risk securities to their depositors. Banks have been viewed in recent theory as suppliers of liquidity and transactions services that reduce costs for their customers and, through diversification, reduce risk. Banks are also critical in the payment system for goods and services and have played an increasingly important role as a guarantor and a risk management role for customers.
 
1-9.   How have banking and the financial-services market changed in recent years? What powerful forces are shaping financial markets and institutions today? Which of these forces do you think will continue into the future?
 
Banking is becoming a more volatile industry due, in part, to deregulation which has opened up individual banks to the full force of the financial marketplace. However, under the new regulatory trend–reregulation, the government tightened the financial-services sector due to crises and market collapse in the previous few years. At the same time, the number and variety of banking services has increased greatly due to the pressure of intensifying competition from nonbank financial-service providers and changing public demand for more conveniently and reliably provided services and increase in returns on their money invested. Adding to the intensity of competition, foreign banks have enjoyed success in their efforts to enter countries overseas and attract away profitable domestic business and household accounts. There has been service proliferation and greater competitive rivalry among financial firms that has led to a powerful trend— convergence. Convergence refers to the movement of businesses across industry lines so that a firm formerly offering perhaps one or two product line ventures into other product lines to broaden its sales base. Apart from these changes, there has also been a considerable improvement in the technological automation leading banking and financial services to comprise of a more capital-intensive, fixed-cost industry and a less labor-intensive, variable-cost industry than in the past. The trends of convergence, consolidation, geographic expansion, and technological change will continue to proliferate in the future years.
 
1-10. Can you explain why many of the forces you named in the answer to the previous question have led to significant problems for the management of banks and other financial firms and for their stockholders?
 
The net result of recent changes in banking and the financial services market has been to put greater pressure upon their earnings, resulting in more volatile returns to stockholders and an increased bank failure in providing those rates. .Increased competition has led to a fluctuation in the bank’s share of the financial service market place. Technological advances have significantly

lowered the per-unit costs associated with high-volume transactions, but they have also depersonalized financial services. Due to consolidation of financial institutions, there has been a decline in employment in the financial-service sector as a whole.       Due to the powerful trend of convergence, weaker firms fail or get merged into companies that are larger with more services. Institutions have also become more innovative in their service offerings and in finding new sources of funding, such as off-balance-sheet transactions. The increased risk faced by institutions today, therefore, has forced managers to more aggressively utilize a wide array of tools and techniques to improve and stabilize their earnings streams and manage the various risks they face.