Separation of Investment and Commercial Banks: 'Pragmatic Perspective'
13 Pages Posted: 3 Oct 2012 Last revised: 11 Oct 2012
Date Written: October 3, 2012
Abstract
The services provided by Investment and Commercial banks have generated a number of interesting debates as a result of global financial outcomes. In view of this phenomenon, this paper analyzed and reviewed the services provided by these institutions to ascertain the essence of separating or integrating their respective roles. To achieve this objective, the impact of regulation after the enactment of the Glass-Steagall and its amendment was reviewed to form a judgment. It is evidenced that the repeal of the Glass-Steagall Act resulted in deregulation giving rise to financial efficiency however, consequence of this action demonstrates that there is a greater need for regulation of specific function performed by these banks irrespective of whether they perform depository or combination of depository and investment banking.
Keywords: Glass-Steagall, Investment banking, Depository, Bank, Regulations
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