Moreover, the cost and availability of nondeposit funds for any given bank will depend on the perceived creditworthiness of the institution. Thus, the concerns of holders of uninsured bank liabilities about bank credit quality generate an external finance premium for banks that is similar to that faced by other borrowers.
Successive revisions of legislation covering financial institutions encouraged greater cross-pillar competition in some areas, leading to lower costs and improved efficiency. But over the past decade, other countries have caught up and are forging ahead. During this time, two trends changed the global environment for financial institutions. First, with the expansion of world trade, national markets became truly global.