MYLAB ECONOMICS WITH PEARSON ETEXT -- A
MYLAB ECONOMICS WITH PEARSON ETEXT -- A
5th Edition
ISBN: 2819260099840
Author: Mishkin
Publisher: PEARSON
Question
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Chapter 11, Problem 5LO
To determine

The reasons for separating banking from other financial services through legislation.

Concept Introduction:

According to the Glass-Steagall Act of 1933, commercial banks were allowed to sell new issues of government securities. However, they were not allowed to underwrite or deal in corporate securities. The banks were also prohibited from engaging in brokerage, real estate or insurance activities. On the other hand, it prevented financial service companies like insurance companies, investment banks, etc. to engage in activities of the commercial banks.

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