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July 2012, Vol. 135, No. 7
Improved measures of commercial banking output and productivity
Sara E. Royster
Sara E. Royster, formerly an economist in the Office of Productivity and Technology, is an economist in the Office of Occupational Statistics and Employment Projections, Bureau of Labor Statistics. Email: email@example.com.
The services that commercial banks offer have changed greatly since the 1980s because of deregulation, the expansion of information technology, and innovations in the types of services offered. Traditionally, commercial banks' primary services included facilitating transactions, providing loans, and safekeeping money and other valuables. However, with the repeal of the regulatory limits of the Glass-Steagall Act, banks began performing an increasing variety of functions, including providing investment advice, underwriting securities, and writing insurance policies.1
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1 For much of the 20th century, the commercial banking industry was heavily regulated. The Glass-Steagall Act was passed in 1933 to regulate the financial industry following the collapse of the banking system at the beginning of the Great Depression. The Act created the Federal Deposit Insurance Corporation (FDIC) to guarantee the safety of most bank deposits, gave the Federal Reserve the power to regulate interest rates on deposit and savings accounts, and prohibited bank holding companies from owning other financial companies, among other things. In 1980, the Depository Institutions Deregulation and Monetary Control Act began to strip away these regulations, allowing individual banks to merge and removing the regulation of interest rates. The passage of the Riegle-Neal Act in 1994 further eased limits on banks' activities by permitting banks to operate freely across state lines. Many of the remaining restrictions instituted by Glass-Steagall were removed in 1999 with the passage of the Financial Services Modernization Act. The Act allowed commercial and investment banks to merge by permitting bank holding companies to own other types of financial services companies.
Compensation-productivity gap: a visual essay, The. — Jan. 2011.
Labor productivity trends since 2000, by sector and industry. — Feb. 2008.
Productivity in banking: computers spur the advance. — Dec. 1982.
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