《COMPETION AND REGULATION IN FINANCIAL MARKETS》

1.FINANCIAL INSTITUTIONS AND REGULATION IN THE 21ST CENTURY： AFTER THE CRASH？Franklin R. Edwards1

1. Introduction1

2. Goals of financial regulation1

3. A conceptual framework for the current evolution of financial institutions and markets2

3.1 Product markets3

3.2 Spatial markets4

4. Regulatory implications6

4.1 Monetary control6

4.2 Bank solvency and financial soundness8

5. Regulatory reform： some general proposals11

Notes12

References13

COMMENT ON EDWARDSAlfons Verplaetse14

2.THE COMPLEMENTARY NATURE OF COMPETITION AND REGULATION IN THE FINANCIAL SECTORJack R. S. Revell16

1. The debate on deregulation16

2. Competition17

3. Electronic funds transfer20

4. Cycles， crises and agreements22

5. Recent events25

6. Forms of prudential regulation27

Notes30

References30

COMMENT ON REVELLDirk Heremans32

3. DEREGULATION OF DEPOSIT RATE CEILINGS IN THE UNITED STATES： PROSPECTS AND CONSEQUENCESRobert A. Taggart35

1. Introduction35

2. Evolution of the debate over rate ceilings36

3. Recent evidence on the effects of rate ceilings37

3.1 Rate ceilings and the supply of funds to the housing sector37

3.2 Rate ceilings and the safety of depository institutions39

4. Rate ceilings and the regulatory process42

4.1 The public interest versus the capture theory of regulation42

4.2 Dynamic theories of regulation43

5. Conclusions47

Notes48

References49

COMMENT ON TAGGARTMarcel Maes52

4.CONCENTRATION AND ECONOMIES OF SCALE IN THE BELGIAN FINANCIAL SECTORJozef Pacolet and Albert Verheirstraeten55

1. Introduction55

2. Concentration in the financial markets57

2.1 The definition of financial markets57

2.2 Applied measures of concentration59

2.3 Concentration in total output of the Belgian inancial intermediaries62

2.4 Concentration on the markets for the individual assets and liabilities69

3. Economies of scale in the banking sector76

3.1 Economies of scale， cost functions and their relation-ship with concentration76

3.2 Specification of cost functions and identification of economies of scale79

3.3 Testing economies of scale in the Belgian banking sector80

4. Conclusions84

Appendix 4.1 List of symbols and abbreviations86

Appendix 4.2 Extreme values for the calculated concen- tration measures87

Notes86

References90

COMMENT ON PACOLET AND VERHEIRSTRAETENMichel De Smet and Georges Martin92

5.PROFITABILITY AND RISK OF THE BELGIAN FINANCIAL SECTOR： A STOCK MARKET ANALYSIS AND A COMPARISON WITH ACCOUNTING DATALieven Gheysens97

1. Introduction97

2. A stock market analysis of the bank sector98

3. A stock market analysis of the individual banks100

4. The riskiness of investments in the bank sector and in individual banks102

5. Evaluating the risk-adjusted returns on individual banks104

6. Market valuation versus accounting valuation106

7. Conclusions110

Notes111

References113

COMMENT ON GHEYSENSHerwig Langohr114

6.BANK INTERMEDIATION UNDER FLEXIBLE DEPOSIT RATES AND CONTROLLED CREDIT ALLOCATION： THE ITALIAN EXPERIENCEMario Monti and Angelo Porta117

1. Introduction117

2. Bank intermediation and liquidity in the Italian economy118

3. Determinants of the scale of bank intermediation121

3.1 The supply of funds to banks121

3.2 The demand for funds from banks126

3.3 The behaviour of banks127

4. A reconsideration of the regulatory system as a determin-ant of banking expansion130

4.1 The banking law of 1936130

4.2 Bank regulation in the 1970s132

5. Bank intermediation and the of effciency of the financial structure137

6. Criteria for a policy towards bank intermediation141

6.1 On the desirability of a relative decline of bank intermediation142

6.2 Feasibility in the short run143

7. Summary and conclusions148

Notes149

References152

COMMENT ON MONTI AND PORTAPaul de Grauwe154

7.GOVERNMENT INTERVENTION IN THE FRENCH FINANCIAL SYSTEMFlorin Aftalion157

1. Introduction157

2. The institutional framework158

2.1 General outlook158

2.2 Credits for housing160

2.3 Loans to agriculture163

2.4 Loans for exports165

2.5 Loans for industrial development167

2.6 Caisse des depots et consignations （CDC）168

3. Concluding remarks170

Appendix 7.1 List of abbreviations171

Notes171

References172

COMMENT ON AFTALIONAlain Siaens173

8.MONETARY POLICY AND THE LOAN RATE IN THE NETHERLANDSRoberto E. Wessels175

1. Introduction175

2. The neo-classical model of bank behaviour176

3. The basic model179

4. An alternative scheme for central bank advances183

5. Summary and conclusions188

Notes189

References189

COMMENT ON WESSELSJozef Vuchelen191

9.MONETARY RESTRAINT THROUGH CREDIT CONTROL IN THE UNITED KINGDOM —THE LESSONS OF RECENT PRACTICERoy A. Batchelor and Brian Griffiths195

1. Introduction195

2. Monetary policy innovations 1971—9197

2.1 Competition and credit control198

2.2 The corset202

2.3 Monetary targets204

3. Welfare effects of the corset206

3.1 The costs of violation206

3.2 The costs of observance208

3.3 The costs of anticipation209

4. The controls fix213

Notes216

References217

COMMENT ON BATCHELOR AND GRIFFITHSFrank Boll218

10.BANKING POLICY AND COMMERCIAL BANK BEHAVIOUR IN GREECEAnthony S. Courakis220

1. Introduction220

2. An outline of controls bearing on the asset and liability structure of commercial banks221

3. On the rationale， implications and complications of the present structure of controls223

4. Aspects of commercial bank behaviour226

4.1 Expected utility maximisation and commercial bank behaviour228

4.2 Defining a choice set and reflecting on features of the balance sheet of commercial banks in Greece229

4.3 Expected yields and actual rates237

5. A tale of a Greek commercial bank237

5.1 Specification238

5.2 Estimation242

6. Concluding remarks248

Appendix 10.1 Cash ratios on liabilities， 1969Ⅰ to 1971Ⅳ250

Appendix 10.2 Security ratios on liabilities251

Appendix 10.3 Total reserve ratios on deposits， 1969Ⅰ to 1977Ⅳ252

Appendix 10.4 Bank shares in total commercial banking business （percentage）253

Appendix 10.5 A comparison of the asset and liability structure of Greek commercial banks， De- cember 1975254

Appendix 10.6 Loans and investments in the categories defined in the 15 per cent regulation255

Appendix 10.7 Treasury bills held in accordance with the administration of the 15 per cent regulation256

Appendix 10.8 Loans in accordance with the 6 per cent regulation257

Notes258

References261

COMMENT ON COURAKISGerard Vila264

11. COMPETITION AND REGULATION IN FINANCIAL MARKETS： CONCLUDING OBSERVATIONSAlmarin Phillips267

1. An overview267

2. Some specific comments268

3. Some pessimistic conclusions271

Notes274

References274

Index275