Finance companies obtain funding from sources other than deposits to provide various types of loans. While they make similar loans to banks, they face different regulations as most are regulated at the state level. Consolidation in the finance industry has increased over time, with the largest 20 firms controlling over 70% of assets by the late 1990s. Financial conglomerates also emerged to provide diverse financial products and seek synergies across business lines.

1. Chapter 13 Managing Nonbanks: Finance Companies, Financial Services Conglomerates, and Merger Consolidation

8. Trends in Average U.S Finance Company Assets and Liabilities, Year-End 1991, and 3rd Quarter, 1998 (% Total) Consumer 21.72% 27.25% Business 52.12 35.77 Real Estate 11.72 10.51 Less Reserves for Unearned and Losses 12.12 7.00 Net Receivables 73.44 66.53 Other Assets 26.55 33.48 Total Assets 100.0% 100.0% Receivables 1991 3rd Quarter 1998 Liabilities 1991 3rd Quarter 1998 Liabilities and Capital Bank Loans 7.54% 2.66% Commercial Paper 28.40 24.20 Debt: Owed to Parent 6.14 6.22 Not Elsewhere Classified 34.09 36.05 All other Liab. 12.30 19.79 Equity 11.53 11.06 Total Liab. & Capital 100.0% 100.0% Assets Source: Information from the Federal Reserve Bulletin 79 (Jan. 1993), A35 and 85 (March 1999), A33.