ABSTRACT
In Part 2 the regulation of banking in nineteen countries and within a united Europe was examined, with particular emphasis on those regulatory constraints that are imposed and varied as part of the implementation of monetary policy and their impact on the operation of an individual commercial bank within each economy. It is the purpose of this Part to introduce into the model of the unregulated bank, which was developed in Part 1, the main forms of regulatory control found in the last Part. We are interested in identifying the minimum and the maximum possible effects of the various regulations, since the competitive structure of banking, the institutional environment and the pattern of overall regulation will determine for each individual economy where, between these possible effects, the actual effect will lie. Further, as we are only looking at the effects on an individual commercial bank, we assume for simplicity that the other banks within the industry will react as our bank does, in order that their positions within the industry may be maintained. Of course, this assumption may need to be varied in the case of some competitive structures, but we assume that the industry is composed of several at least medium-sized banks, that is, it is an oligopoly whose members will be anxious to maintain their relative positions within the industry.
