A dynamic model of firewalls and non-traditional banking

Article Abstract:

The entry of commercial banks into investment banking industry is opposed by many sectors in the business due to the heavy risk and conflict of interest that may arise. Commercial bank officials cited, on the other hand, the practice of brokerage firms and the healthy competition that will ensue upon the repeal or modification of the Glass-Steagall Act of 1993, which does not allow banks to venture into the securities industry. Analysis of the dynamic control model shows that the need for firewalls to prohibit banks from venturing into non-traditional business is diminished if entry and exit costs relating to non-traditional business are substantial.

Commercial Banking, Investment Banking and Securities Dealing, Investment Banking, Security brokers and dealers, Commercial & Savings Banks, Services, Investment banks

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An instantaneous control model of bank reserves and Federal funds management

Article Abstract:

A stochastic control model based on the instantaneous control model for analyzing the association between bank size and Federal fund buying and selling was presented. The model showed that brokerage fees, net deposit growth rates and interest rate differentials between money market and deposit rate affected the Federal fund strategies of banks. When the Federal reserve ratio was lowered, there was a tendency of banks to decrease purchases of Federal funds.

National commercial banks, Models, Practice, Federal funds market (United States)

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Loan covenants and corporate debt policy under bank regulations

Article Abstract:

Corporations depend on short-term bank loans to fund certain projects. Such loans are provided by banks but with safety covenants to protect themselves against loan default risks. An analysis is done on the relationship of short-term bank financing and long-term corporate debt. Their joint effect on corporate equity value is also studied.

Banking Institutions, Depository Credit Intermediation, Research, Finance, Banks (Finance), Corporations, Corporate finance, Debt financing (Corporations), Debt financing, Short-term financing, Short term financing

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