The Changing Structure Of The US Banking Business Model:, Deregulation: Innovation And The Financial Crisis

Abstract

This article is centered on the idea that the changing structure of the US Banking Business Model offers an explanation to the recent financial crisis. It highlights the active role often played by banking regulationsand laws in the US as the roots of these radical changes as well as the rise of financial innovation especially the process of securitization as the beating heart of the new model. A particular attention is given to the responsive measures after the financial crisis especially the introduction of new regulations to restrain the risky behavior of the banking industry and their ability to transform the dominant banking model from an “Originate-to-Hold model” to the new “Originate-to-Distribute” one. The article is divided into two Sections, Section1 represent an attempt to discuss the importance of banking regulation and deregulation in changing the banking industry and the business model in the US. Section2 tries to explain the rise of financial innovations and the mechanism of securitization that underpinned the new model of banking development, then it takes a good look at the financial crisis and how the government responded to this crisis and what’s the effect in the present day on the business model of banks. Key Words- US Banking Model, Deregulation, financial innovations, Securitization, financial crisis.