Commercial Banks: Industry Overview

Business loans have dropped in importance since 1987 as measured by the proportion of these loans on the bank balance sheet.

• True

• False

Loans comprise the single largest asset category for a bank.

• True

• False

Banks have an average total debt ratio of about 90%.

• True

• False

On average, bank liabilities tend to have shorter maturities and greater liquidity than bank assets.

• True

• False

Nontransaction deposits at banks include NOW accounts and demand deposits.

• True

• False

The majority of banks are nationally chartered and insured by the FDIC.

• True

• False

Since 1980 the number of banks in the United States has been increasing dramatically due to deregulation of the industry.

• True

• False

In 2010, the notional value of bank off-balance-sheet activities was greater than bank industry assets.

• True

• False

Banking may be subdivided into at least three categories of banks. Match up the definitions with the appropriate name.

I. A bank that specializes in retail or consumer banking in a local market.

II. A bank that engages in a complete array of wholesale commercial banking activities and usually also provides retail banking services.

III. A bank that is located in a financial center and relies on non-deposit or borrowed sources of funds for a significant portion of its liabilities.

• Money center bank; Community bank; Super-regional bank

• Community bank; Money center bank; Super-regional bank

• Super-regional bank; Money center bank; Community bank

• Money center bank; Super-regional bank; Community bank

• Community bank; Super-regional bank; Money center bank

Bank assets tend to have _____________ maturities and _____________ liquidity than/as bank liabilities.

• longer; greater

• longer, lower

• shorter; greater

• shorter, lower

• equal, equal