Consumer banking issues
Article Abstract:
A brief history of banking legislation since the 1970s introduces the discussion of laws limiting the float time related to check processing. California and New York were the first states to enact laws limiting check float to one business day. Since these laws were passed in 1984, 18 other states have either passed or begun work on similar legislative acts. The U.S. Congress is also considering check float limitation laws or check holding regulations, because some federally chartered financial institutions are not bound by state laws. The Federal Home Loan Bank Board has developed rules that support the preemption of state laws by federally chartered institutions. The need for some limitation on check processing time is evidenced by research in which it was discovered that 669 banks in ten states place a three to five day hold on all local checks, prior to clearing them. The author of the article, a representative in Congress, has introduced the Expedited Funds Availability Act to mandate clearing of funds in checking and savings accounts within one to six days, and to require interest accruals on deposited funds to occur more quickly. The details of the proposed law are provided. (Since the article was written, the Expedited Funds Availability Act was passed into law on January 23, 1986.)
Publication Name: Journal of Bank Research
Subject: Business
ISSN: 0021-9215
Year: 1986
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The merger guidelines, concentration and excess capacity in local commercial banking markets
Article Abstract:
The U.S. Department of Justice's 1984 Merger Guidelines suggest that market power is found in highly concentrated markets while a lack of efficiency caused by excess capacity is not. The smallest output level at which scale economies are fully exploited while minimizing average costs is known as minimum efficient scale (MES). When MES is used together with information on market demand, it is possible to determine the largest number of firms and the lowest degree of concentration which will support an efficient market operation. Evidence from the Eighth Federal Reserve District indicates that excess capacity and high concentration can be found together in many local commercial banking markets. As a result, the Department of Justice's view that the guidelines will allow mergers which achieve efficiency without interference is not a generalization which can be applied to local commercialbanking markets.
Publication Name: Journal of Bank Research
Subject: Business
ISSN: 0021-9215
Year: 1985
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