Banking System in America Essay Example | Topics and Well Written Essays - 1750 words

Banking System in America - Essay Example In the United States of America, separate financial regulatory structures are in place to regulate the Insurance and financial securities aspects of the banking sector at the State and the Federal level and. these regulatory agencies are controlled by the Federal government in conjunction with the State governments. In the United States of America, there are laws that are enacted to prevent money laundering, anti-terrorism laws, laws that are meant to prevent usury lending, anti-fraud and privacy laws, and laws to promote lending of money to people with small incomes, all this fall under the banking sector. This paper discusses the performance of the banking industry in America. In effectively discussing this aspect, this paper will give the industrial characteristics of the banking sector in United States of America. It will review the pricing, efficiency and profitability of the banksin America as well as analyze environmental factors that drive the Banking sector in America and th ereafter access there impacts. This paper seeks to answer the following questions, What are the industrial characteristics of the Banking sector in United States of America? How efficient is the banking system in United States of America in providing services to its people? What are the environmental factors that influence the performance of the banking system in America and what are its implications? The banking system in America is regulated by The National Banking acts of 1863 and 1864 and they are responsible for the creation of the banking system in the United States of America and any other legislation created, needs to be in accordance to this laws. This act promoted the development of a currency that could be used all over the United States of America and it supported withholding of bank assets which includes financial securities offered by the treasury of the United States of America. The National Banking Act recognizes the office of the treasury regulator whose role is to control the value of the United States currency and ensure that banks don’t collude to manipulate the American currency, the dollar. Banks in United States of America are characterized by the notion of relationship banking. This characteristic of the United States Banking system is for the purposes of maintaining profitability . Relationship banking refers to a situation where banks provide financial services through an intermediary. In the United States of America, banks practice these aspects of financial system. The main aim of banks in applying the principles of relationship banking is to enable them acquire information about a client to be used in the long run. These aspects of banking is important because it reduces the cost of gathering information about a client through many transactions and the information gathered, banks can use them to introduce other services in the economy and finally through this system of relationship banking, banks and their clients build a re putation through constant financial interactions and therefore facilitates negotiations of low cost loans. The American banking system is also characterized by emergence of private banks. American banking system allows expansion of commercial banks opened by individuals or companies. This was made possible by the requirements of The National banking act of 1863 which allowed competition in the