Abstract
This paper compares bank share manipulation in Israel with that in the United States prior to the passage of the Glass‐Steagall Act and uses the comparison to assess the desirability of restricting the investment banking activities of commercial banks—not only in the United States and in Israel, but also in the economies in transition (EITs) of Eastern Europe. Many of the techniques of and motivations for manipulation were similar. However, because of their larger relative size, banks in Israel, were far more successful in eliminating market risk. The paper concludes that Glass‐Steagall restrictions could prove a useful policy prescription in Israel, the EITs, and elsewhere in the developing world.
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