after the breakdown of the cartel on the effectiveness
of monetary control are specified in Chapter Seven.
NOTES - CHAPTER FOUR
[1] G i l c h r i s t (1986) provides a s t r a i g h t f o r w a r d a n a l y s i s of the ov e r a l l regula t o r y changes w i t h respect to b u i l d i n g societies. For i n t e r e s t i n g analyses of the m o n e t a r y a u t h o r i t i e s views as to the changing a c t i v i t i e s of bui l d i n g societies, see R i c h a r d s o n (1978), Davis and Sa v ille (1982), R i c h a r d s o n (1983), and D r a y s o n (1985). [2] Of seven m ajor i n n o vations introduced in the U.S.A.,
Hes t e r argues that all w e r e induced by p r e v i o u s
mo n e t a r y policy d e c i s i o n s by the authorities. Simons war n e d of the dangers of ignoring i n s t i t u t i o n a l c h a n g e as far back as 1936.
A k h t a r (1983) outlines the main broad c a t e g o r i e s of fina n c i a l change in the Unit e d States, the U n i t e d Kingdom, Canada, Japan, France, Ge r m a n y and Italy as being:
(a) T h e increa s i n g use of interest s e n s i t i v e e funds by banks and other fina n c i a l institutions,
(b) v a r i a b l e r ate lending or borro w i n g and m a t u r i t y shortening,
(c) the g r o w t h of f i nancial markets and of m a r k e t a b l e f inancial instruments,
(d) the c h a n g i n g shape of retail banking,
(e) the d i v e r s i f i c a t i o n of sources of f i n a n c i a l s e r v i c e s •
[3] In fact, once they had reached their d e s i r e d
p ortfolios, the retail banks employed a n u m b e r of r a t i o n i n g d e v ices on their m o r t g a g e lending. M a n y borro w e r s had to mai n t a i n an account for a m i n i m u m
peri o d to q u a lity for a mortgage, and r e s t r i c t i o n s were placed on the m a x i m u m amounts banks w e r e w i l l i n g to lend as a p r o p o r t i o n of property value or as a m u l t i p l e of income. Of course, these are p h e n o m e n a m o r e n o r m a l l y a s s o c i a t e d w i t h the b u ilding society industry.
[4] T h e Gr e e n Paper "Building Societies: A Ne w F r a m e w o r k " (July 1984) had r e c o m m e n d e d the a b o l i t i o n of the
cartel, d e e m i n g it to be a n t i -competitive, w h i l s t its r e m o v a l wo u l d e n courage
"the free play of market forces w h i c h w o u l d e n s u r e the best d eal for savers and borrowers".
[5] F i n a n c i a l i nnovations are a l l e g e d to o c c u r in
'clusters' or 'swarms' (Podolski 1985, 1986) as one f i n a n c i a l in n o v a t i o n acts as the c a t a l y s t for another. It does s eem that in p r a ctice one f i nancial i n n o v a t i o n w ill t r i gger off another, partic u l a r l y in the form of a c o m p e t i t i v e innova t i o n from a c o m p e t i n g f i n a n c i a l
institution. Th e e v i dence as to 'swarms' of f i n a n c i a l inno v a t i o n s is not clear-cut, however.
[6] It may be s i g n ificant that a b u ilding s o c i e t y (the N o t t i ngham) was the first inst i t u t i o n to o f f e r a full home b a n k i n g service in c o n j u n c t i o n w i t h the B a n k of Scotland.