A $10 million lesson in the risks of electronic banking

Article Abstract:

A hacker with a personal computer transferred $10 million from Citibank accounts. A Federal complaint reveals that, in 1994, the hacker and his accomplices broke into a cash management system which transfers money around the world. The system handles half a trillion dollars a day. The break-in underscores the need for security in electronic banking. New York Clearing house operates Chips, the wire-transfer system Citibank uses. Usually, the system requires that multiple employees, each with a different password, approve any transfer. Computer-generated security codes provide another level of protection. Citibank now requires that customers use an electronic device that generates a new password for each transfer. Analysts believe this in the first time PC users were able to penetrate a bank system. No Citibank employees are suspects, and all but $400,000 was recovered. The investigation continues.

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A test of prospect theory: the correlation between unexplained variance of return and target return in the commercial banking industry

Article Abstract:

Prospect theory can be applied to the banking industry, and is likely to be most accurate in below-target contexts, with risk aversion decreasing the further decision makers find themsleves below target. This study suggests that banking firm models should take convex segments of utility functions into account. If regulators of the industry fail to take a decrease in risk aversion into account, their ability to monitor the industry may be affected.

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Interstate Banking Is

Article Abstract:

The push for interstate banking is examined. Small and medium sized customers will benefit most from interstate banking. The government's attitude toward interstate banking is explored. The states that have tried forms of interstate banking have found it to be good business for their economy. Changes that banks will have to make with the introduction of interstate banking are presented.

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