ABSTRACT
It has been the intention of this study to take a modern view of the form and scope of banking. We began with the problem of identifying the nature of banking and considered that this was appropriately described as the retailing of services. In order to consider the effects of regulation, we began with a model of a bank operating in an unregulated environment, which provided a simplified description of the operations of a bank. Next, we investigated the main regulatory constraints imposed in nineteen countries, and derived from this the main forms used and certain combinations preferred by monetary authorities. It was seen that the quantity restrictions were the most critical for domestic banks when placed in our model (as well as empirically) and this was seen to offer some impetus to diversification both domestically and internationally.
