Banking

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European Banking

In the late 20th Century

Significant structural differences distinguished the U.S. banking system from that of developed nations at the end of the 20th century. The main differences were, in some cases, in ownership, scope and concentration of activities, and the giro system of banking.

Virtually all banking institutions in the U.S., as well as Canada and Great Britain, are privately owned. In France and Italy, however, the government, in the late 20th century, either owned the major commercial banks or the majority of their stock.

European banks engaged in some activities prohibited to banks in the U.S., such as the placement and acquisition of common stock. Commercial banks in Europe tend to be more business oriented and limit their lending to shorter-term loans. Long-term loans were handled by bank affiliates. The share of the deposits and loans handled by the major European banks tend to be considerably larger than that handled by their U.S. counterparts. This stems from the absence of restrictions on branching, leading the large European banks to maintain extensive networks of branches in their home countries. The absence of an antitrust tradition also accounts for the greater degree of concentration.

A common system of arranging consumer payments in Europe was the use of giro accounts. In a giro transaction, the payer will ordered the giro bank to pay specific sums to a number of payees. The payer’s account was debited, and the payees’ accounts were credited.

More about Banking

Commercial Banking in the United States

Commercial banks are the most significant of the financial intermediaries. Read more about Commercial Banking in the U.S. here.

Thrift Institutions

Savings and loan associations (SLAs) and savings banks are similar but separate financial institutions. Both were patterned after cooperative movements in Scotland and England. See more about Thrift Institutions here.

Banking in the United Kingdom

Since the 17th century Great Britain has been known for its prominence in banking. London still remains a major financial center, and virtually all the world’s leading commercial banks are represented there. Read more about banking in Great Britain here.

Role of Central Banking

The foremost monetary institution in a market economy is the central bank. These are usually government-owned institutions, but even in countries where they are owned by the nation’s banks (such as the United States and Italy), the responsibility of the central bank is to the national interest. Read more about central banking here.

International Banking

In 1978 the U.S. Congress passed the International Banking Act, which imposed constraints on the activities of foreign banks in the United States. Read more about international banking here.

Source: “Banking” Microsoft® Encarta® Online Encyclopedia

See Also

Finance
Investment Banking
Savings Institutions
Credit Union
Venture Capital

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