The purpose of this article is to provide evidence on the value of government regulation of accounting reports. The banking industry was initially exempt from the disclosure provisions of the Securities Act of 1933 and the Securities and Exchange Act of 1934, because the U.S. Congress apparently felt that the banking industry was already regulated. In 1964, the Securities Acts were amended to require specifically that the Comptroller of the Currency, the Federal Reserve Bank, and the Federal Deposit Insurance Corporation regulate bank financial reporting. To test whether or not the informational content of state bank financial statements increased after the regulations, some surrogate for information must be used, because information itself is not directly measurable. Changes in security prices are commonly used as a proxy for information because stock prices represent weighted averages of investor expectations. The test based on the stable symmetric distribution and the non-parametric test both indicate that the announcement of bank financial data is associated with unexpected price movements which is consistent with the belief that financial statements contain information that investors act on

This paper discusses general principles for choosing bank assets and liabilities, for deciding on when to make a loan and what interest rate to charge, for pricing funds transfer services such as the handling of checks, for establishing compensating balance requirements, and for dealing with government regulation. The discussion assumes markets are efficient and deals first with an unregulated environment and then with policies in the face of regulatory constraints. Most of the policies which would be optimal in an unregulated environment will be optimal in the regulated environment such as in the U.S. today, because it is relatively easy to get around most of the regulations that are applied to banks by the use of non-deposit liabilities, compensating balances and negative checking accounts

Part 1 The basics: introducing money money, the economy and inflation financial instruments and markets financial institutions - purposes and profile calculating interest rates the level of interest rates. Part 2 Intermediaries and banks: the regulation and structure of depository institutions commercial bank asset and liability management nondeposit financial institutions international banking financial innovation the payments system. Part 3 The art of central banking: who's in charge here? bank reserves and the money supply the instruments of central banking understanding movements in bank reserves hitting the monetary targets budget deficits and the money supply. Part 4 Monetary theory: the foundations of monetarism the Keynesian framework the ISLM world monetarists and Keynesians in the ISLM world monetarists and Keynesians - an aggregate supply and demand perspective rational expectations - theory and policy implications empirical evidence on the effectiveness of monetary policy. Part 5 Financial markets and interest rates: risk and portfolio choice flow of funds accounting - a framework for financial analysis the structure of interest rates the structure and performance of securities markets the government securities market other fixed-income markets - corporate bonds, municipals, and mortgages equities, the stock market and interest rates financial futures and options. Part 6 International finance: foreign exchange rates fixed versus floating exchange rates balance of payments accounting the gold standard epilogue - careers in banking and financial markets