The U.S. commercial banking industry has undergone substantial change during the past one hundred years. This is true both in terms of commercial banks' geographical presence, the financial products and services offered, as well as organizational structures. Since the 1980s, we have also seen a dramatic change in the number of commercial banks. The figures below provide graphical evidence on these changes based on historical bank data from the Federal Deposit Insurance Corporation. Figure 1 shows the sources of changes in the number of commercial banks: newly established ("chartered"] banks. mergers between existing institutions, and failures of existing institutions. Figure 2 shows the total number of commercial banks. Figure 1: Changes in number of commercial banks 800 700 600 500 400 300 200 100 1985 1990 1995 2000 2005 2010 2015 2020 -New charters -= = Mergers ..*: Failures Figure 2: Total number of commercial banks 16000 14000 12000 10000 8000 6000 4000 2000 1985 1990 1995 2000 2005 2010 2015 2020Question 1.1: Using the evidence provided in Figures 1-3, briefly describe the trends in the U.S. banking industry structure between 1985 and 2020. Question 1.2: Antitrust authorities worry that firms in concentrated industries "exploit" the consumers of their products and services due to a lack of competitive pressure. Is this graphical evidence on the U.S. banking industry consistent with this concern? What more detailed information might buttress your argument?A broad array of specialized non-bank financial institutions participate in financial markets. Like commercial banks, these non-banks (insurance companies, pension funds, mutual funds, and so on) channel funds from savers into loans for individuals, businesses, and governments. In the past 30 years, there have been significant changes in the amount of funding that non-banks provide in credit markets. The figures below provide graphical evidence on these changes based on data from the Federal Reserve System. Figure 1 shows the growth in credit across six important categories of non-bank between 1997 and 2006 (normalized to 100 in 1997:Q1). Figure 2 shows the equivalent growth rates for the years between 2007 and 2015 (normalized to 100 in 2007:Q1). Figure 1: Growth in non-bank credit (1997-2006) [normalized to one in 1997:Q1] 500 400 300 200 100 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 -Insurance -Pension Funds -Finance Companies -Mutual Funds -Securities Broker Dealers-ABS Issuers Figure 2: Growth in non-bank credit (2007-2015) [normalized to one in 2007:Q1] 600 500 400 300 200 100 2007 2008 2009 2010 2011 2012 2013 2014 2015 -Insurance -Pension Funds -Finance Companies -Mutual Funds -Securities Broker Dealers-ABS IssuersQuestion 2.1: Based on the graphical evidence, which type of non-bank experienced the fastest rate of expansion of credit provision (in percentage terms) from 1997 until 2006? Which type of non-bank experienced the sharpest decline between 2007 and 2015? Question 2.2: "Non-banks can complement banks by providing funding in loan markets. Therefore, greater non-bank participation will always lower the cost and improve the availability of loans." Do you agree or disagree with this statement? Explain