Book Review: Trends Affecting the U.S. Banking System

• DOI: 10.1177/0003603X7802300311
• Date: 01 September 1978
• Published date: 01 September 1978
• Author: Peter S. Rose
• Subject Matter: Book Reviews

Paul

V. Teplitz, Trends Affecting the U.S. Banking System,

Cambridge, Mass.: Ballinger Pub. Co. (1976), 206 pp.

The U.S. banking system is in the midst of a period of

turmoil and change in both its

structure

and

basic functions.

Amassive postwar

merger

and holding-company movement

along with a

drift

toward branch banking have resulted in

marked changes in the

structure

of the industry. The

trend

is toward a more concentrated system with smaller numbers

of independent banks holding a

larger

proportion of the in-

dustry's

total resources. Changes in

industry

function also

are

underway, resulting in new product lines so

that

the term

"financial department stores" is more descriptive of modern

banks today than ever before. Some changes in the industry

are

a -reaction to events

during

the Great Depression of the

1930's and the

war

years. Most, however, may be traced to

the evolution of commercial banking toward

greater

profit

motivation and an awareness

that

profits can only be in-

creased by meeting more effectively the financial needs of

businesses, households,

and

governments.

This book by

Paul

V. Teplitz is a concise review of recent

trends in U.S. banking. 'I'horoughly researched, the book is

based upon an exhaustive bibliography containing the most

important

source material on the industry. Trends Affecting

the U.S. Banking

System

should be of

particular

interest

to

bank directors

and

managers who

are

intimately concerned

with

future

strategy

and

planning

and

to bank regulators

and those concerned with euforcing the

antitrust

laws in bank-

ing. Because the book presents an excellent distillation of the

banking research

literature,

it

should also be of consider-

able

interest

to students of the

industry

interested in where

American banking is headed and why.

The principal focus of Teplitz' book is an examination of

the interaction between banking

and

its

environment. Ex-

ternal

forces (such as regulations, economic conditions,

and

the like)

are

viewed as

restraints

upon the industry's growth

and

development. As the

author

notes,

693

694

THE

ANTITRUST

BULLETIN

no

matter

what the internal changes

that

might occur,

in

structure

or

in particulars, the

industry

must always

cope with these external forces. Understanding those

forces allows us to reduce the range of speculation about

the future. (pp. 1-2)

The most critical external forces affecting American banking

include the regulatory environment, the economy, competi-

tive surroundings, and technological developments.

'I'he book is divided into six chapters

and

an appendix.

The opening section focuses upon the role of the banking

system within the U.S. financial system and presents an over-

view of the structure of the industry. This is followed by

aperceptive discussion of the economic environment and the

ways in which changes in the postwar economy have influ-

enced the industry.

The

third

chapter

examines competition

in banking

and

the proposals

for

reform of the American

financial system. This is followed by a critical look

at

present

and

future

regulation by both federal

and

state

governments.

The fifth

chapter

contains apenetrating analysis of recent

technological changes, including athorough discussion of the

role of electronic funds

transfer

in the

future

makeup of the

industry. The final section summarizes the study's findings

and draws inferences about the

future

of American banking.

An appendix reviews the effects of recent changes in branch

banking legislation in the

State

of New York, especially the

1971 statewide branching law. (On

January

1, 1976 New York

converted

from

limited branch banking to branching through-

out the state.)

The postwar period has

brought

one of the longest spans of

continuous economic growth in American history. The na-

tion's Gross National

Product

or

GNP (i.e., the value of all

newly produced goods and services) has climbed

at

a com-

pound annual

rate

of nearly 3percent since

World

War

II.

According to

current

projections, the real Gross National

Product

will approach $2 trillion by 1985. However, the na-

tion's growth

rate

is projected to slow significantly

after

that