1. Assume that a bank had the following CAMELS characteristics: C = 3.8, A = 3.5, M = 3.2, E = 3.9, L = 4.4, and S = 4.2. Assuming that each characteristic is weighted evenly, determine the CAMELS rating for this bank (to two decimal places). Would regulators consider this bank to be a “problem” bank? Why or why not?
2- How do economies of scale in banking relate to the issue of interstate banking? Explain.
3- Is it possible for a bank that is growing and expanding to experience “diseconomies” of scale? Why or why not?