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8 Cards in this Set

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What 4 trends in the financial services industry have helped reshape market forces?
Current industry concerns and trends include:
1. profitability
2. globalization
3. deregulation
4. technology
The increase in diversification in the financial services industry is a result of what trend?
Diversification is largely the result of deregulation, especially the passage of the Financial Services Modernization Act of 1999. This act repealed the Banking Act of 1933 (the Glass-Steagall Act), which separated commercial banking, insurance, and investment banking into distinct businesses that were prohibited from engaging in each other's activities.
Why do some lending institutions specialize in specific customer segments?
Specialization allows lending institutions to increase opportunities and decrease risk because they become experts in particular market sectors over time.
Which government regulatory agency has the largest impact on bank operations and monetary policy in general?
The regulatory agency that has the largest impact is the Federal Reserve System.
What are the 3 basic banking functions that your role as a lender will encompass?
The 3 bank functions that are included in the job of a loan officer are:
1. credit
2. operations
3. business development
Why is it important that banks make only low-risk loans?
Banks must make only low-risk loans for 2 reasons:
1. As an intermediary between the depositor and the borrower, the bank must ensure that the depositor will not lose money in the transaction.
2. As a profit-making entity with low margins, the bank must make low-risk loans in order to ensure its continued profitability.
Can you think of a situation in which you might be able to skip some of the steps of preliminary analysis?
If you are renewing a current loan, you may not need to gather as much information in your preliminary analysis as you would if the borrower were new to the bank.
Can you describe 2 benefits to you as a lender in using the Decision Strategy?
1. Saves time, because you are less likely to spend large amounts of time on an opportunity that is not feasible based on risk or policy.
2. Yields a more reliable assessment of risk, because each stage prepares you to get maximum insight out of the next stage.