1 A. Historically, we found that in the USA there were many small banks and they had fewer branches. However, this is not a common scenario in other developed countries. Please explain the reasons why U.S. banking system was developed differently compared to other developed countries. Discuss why in more recent time, specially around and after 1999, U.S. banking system started to look more like that of other developed countries. [4 marks] B. Assume that you are a member of the asset-liability management (ALM) committee of DDR Bank. Recently, you have collected following information, based on which you are requested to write a short report (including all formulas and detailed calculation steps) to the committee comparing the probability of book value insolvency of DDR Bank with a peer bank KLJ. Your associate, Jack Hardin, supplied the following historical return on asset schedule, which might be useful to measure expected return on asset. [6 marks] Year 2019 2020 2021 Historical return on asset schedule DDR Bank KLJ Bank 0.25 0.22 -0.02 -0.10 0.15 -0.05 Total equity (in millions) 15 18 Total liabilities (in millions) 105 90