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Financial market liberalization and the role of banks
Journalof BANKING & ELSEVIER
Journal of Banking & Finance20 (1996) 773-778
FINANCE
Book reviews Bishop, M., Kay, J., Mayer, C., eds., The Regulatory Challenge (University Press, Oxford, 1995) 455 pp. The volume presents a collection of readings on the regulatory experience in the UK since it first emerged in conjunction with the privatization issue. This volume is companion to the volume Privatization and Economic Performance, in the same series. The introduction of many regulatory bodies in various sectors of the economy has seemed to solve old problems in regulated industries, creating at the same time new ones. Problems have been encountered in the process of privatization and regulation of utilities, for the inappropriate industrial structure of the privatized industries, for the lack of understanding of sources of market failure (financial services), or for difficulties of conduct in the agency contract between regulators and the company. The different articles examine various aspects of the UK experience in introducing regulatory reforms, ultimately discussing the advantages of the combination of privatization and independent regulation over state ownership.
Conti, V., Hamaui, R., eds., Financial Market Liberalization and the Role of Banks (University Press, Cambridge, 1993) 376 pp. The volume is a collection of papers that result from a research effort sponsored by Banca Commerciale Italiana. The intention is to evaluate the effects of the liberalization process in financial markets, following the years of deregulation since 1980. Aim of the theoretical and empirical research is to provide banks with an expertise foundation to set appropriate corporate strategies to face the increasing competitive pressure resulting from the liberalization process. The possible impact of this process on both households and firms behaviour, on financial intermediaries response strategies and on the function of financial markets is imalyzed. The first part relates to the behaviour of households and finns, with two papers dedicated to the evolution and allocation of financial wealth, and to the 0378-4266/96/$15.00 © 1996ElsevierScienceB.V. All rights reserved SSDI 0378-4266(95)00020-8
774
Book reviews
financial decisions of industrial firms. The conclusion is that households' financial choices largely depend upon national institutional factors, particularly in considering the non-marketable part of their portfolio. Firms' financial attitudes seem to be constrained by different productive structures more than by different market structures, and from this point of view the integration process is viewed as to be slower than expected. The second part examines the functioning of financial markets, and three papers deal with the exchange market, the equity market and the bond market. These are clearly affected by the liberalization process, and show an increase in price volatility. The last part examines the impact of deregulation on financial intermediaries, and on the asset and liability management.
Ellinger, E.P., Lomnicka, E., Modern Banking Law (2nd ed. - Clarendon Press, Oxford, 1994) 746 pp. This is a thoroughly updated version of the first 1987 edition. The revision is carried out to take into account the developments and substantial changes in banking law and practices that have taken place since 1987. Each chapter of the book has therefore been revisited, both in light of new cases and decisions in the English Law doctrine (a list of all examined cases is in table 1 of the book), and with respect to the reforms of English Banking Law due to the implementation of EC directives (Banking Coordination Regulation 1992 - Second Council Directive). The book focuses mostly on English Law, but with a wide discussion of different Canadian, American and Australian cases. The aim is to provide a thorough overview of the banking legislation within the context of the general legal doctrines, but also underlining the attention on its economic function. Part I deals with banks and the banking business, examining the different kinds of banking structures active in the United Kingdom, the control of banking activities and the relevant EC directives. Part II is devoted to the bank-customer relationship, and examines both roles of the bank of providing account services (deposits) and transactions (payments mechanism). Particular attention is devoted to the banks' liability as a constructive trustee. The third part discusses the "asset-side" of the relationship, and is devoted to current accounting financing and loans, acceptance credits and bills of exchange, and securities for bankers' advance.
Herring, R.J., Litan, R.E., Financial Regulation in the Global Economy (The Brookings Institution, Washington, DC, 1995) 187 pp. Within the context of the growing globalization of the intemational financial system, the book provides a framework for understanding the regulations on intemational policy objectives that countries have agreed on so far, in order to avoid cross-border restrictions on financial instruments that would ultimately
Journal of Banking & Finance20 (1996) 773-778
FINANCE
Book reviews Bishop, M., Kay, J., Mayer, C., eds., The Regulatory Challenge (University Press, Oxford, 1995) 455 pp. The volume presents a collection of readings on the regulatory experience in the UK since it first emerged in conjunction with the privatization issue. This volume is companion to the volume Privatization and Economic Performance, in the same series. The introduction of many regulatory bodies in various sectors of the economy has seemed to solve old problems in regulated industries, creating at the same time new ones. Problems have been encountered in the process of privatization and regulation of utilities, for the inappropriate industrial structure of the privatized industries, for the lack of understanding of sources of market failure (financial services), or for difficulties of conduct in the agency contract between regulators and the company. The different articles examine various aspects of the UK experience in introducing regulatory reforms, ultimately discussing the advantages of the combination of privatization and independent regulation over state ownership.
Conti, V., Hamaui, R., eds., Financial Market Liberalization and the Role of Banks (University Press, Cambridge, 1993) 376 pp. The volume is a collection of papers that result from a research effort sponsored by Banca Commerciale Italiana. The intention is to evaluate the effects of the liberalization process in financial markets, following the years of deregulation since 1980. Aim of the theoretical and empirical research is to provide banks with an expertise foundation to set appropriate corporate strategies to face the increasing competitive pressure resulting from the liberalization process. The possible impact of this process on both households and firms behaviour, on financial intermediaries response strategies and on the function of financial markets is imalyzed. The first part relates to the behaviour of households and finns, with two papers dedicated to the evolution and allocation of financial wealth, and to the 0378-4266/96/$15.00 © 1996ElsevierScienceB.V. All rights reserved SSDI 0378-4266(95)00020-8
774
Book reviews
financial decisions of industrial firms. The conclusion is that households' financial choices largely depend upon national institutional factors, particularly in considering the non-marketable part of their portfolio. Firms' financial attitudes seem to be constrained by different productive structures more than by different market structures, and from this point of view the integration process is viewed as to be slower than expected. The second part examines the functioning of financial markets, and three papers deal with the exchange market, the equity market and the bond market. These are clearly affected by the liberalization process, and show an increase in price volatility. The last part examines the impact of deregulation on financial intermediaries, and on the asset and liability management.
Ellinger, E.P., Lomnicka, E., Modern Banking Law (2nd ed. - Clarendon Press, Oxford, 1994) 746 pp. This is a thoroughly updated version of the first 1987 edition. The revision is carried out to take into account the developments and substantial changes in banking law and practices that have taken place since 1987. Each chapter of the book has therefore been revisited, both in light of new cases and decisions in the English Law doctrine (a list of all examined cases is in table 1 of the book), and with respect to the reforms of English Banking Law due to the implementation of EC directives (Banking Coordination Regulation 1992 - Second Council Directive). The book focuses mostly on English Law, but with a wide discussion of different Canadian, American and Australian cases. The aim is to provide a thorough overview of the banking legislation within the context of the general legal doctrines, but also underlining the attention on its economic function. Part I deals with banks and the banking business, examining the different kinds of banking structures active in the United Kingdom, the control of banking activities and the relevant EC directives. Part II is devoted to the bank-customer relationship, and examines both roles of the bank of providing account services (deposits) and transactions (payments mechanism). Particular attention is devoted to the banks' liability as a constructive trustee. The third part discusses the "asset-side" of the relationship, and is devoted to current accounting financing and loans, acceptance credits and bills of exchange, and securities for bankers' advance.
Herring, R.J., Litan, R.E., Financial Regulation in the Global Economy (The Brookings Institution, Washington, DC, 1995) 187 pp. Within the context of the growing globalization of the intemational financial system, the book provides a framework for understanding the regulations on intemational policy objectives that countries have agreed on so far, in order to avoid cross-border restrictions on financial instruments that would ultimately