issued (Hoover, 1993, p. 2). More than halfof this debt was due to asset-backed debt such as credit cards and othercharges made to credit (Hoover, 1993, p. 2). These debts were includedbecause the debts were more or less sold to banks and other moneylending institutions who were more willing to take the risk for the highinterest rate. This drop in interest rates did wonders for the brokerage firms involvedand also corporations that had acquired debt over the years. The fallof interest rates was great for the brokerage firms because of theincrease in business with the publics desire to invest. So thecorporations used it to issue off more stock to the public to pay offtheir debts (Hoover, 1993, p. 2).As if interest rates didnt have enough effect on brokerage firms, thereis also the heavy competition that was involved. This competition isnot only from other top broker-age firms such as Merrill Lynch, MorganStanley, Primerica (Smith Barney Shearson), Salomon, and Goldman Sachs,but there is also competition from big banks and securities over seas. Banks have a number of ways to compete with security firms, but the mostprevalent and direct is through mutual funds. Since the late 1980sbanks have been ag-gressively competing with mutual fund sponsors byissuing there own mutual funds to the public (Hoover, 1993, p. 3). Mutual funds that are issued by banks are now the fastest growing partof the mutual fund industry, with 10.6 percent of total assets and 30percent of new sales (Hoover, 1993, p. 3). There has just recently beena large amount of compe-tition from markets overseas and thiscompetition continues to increase. There are a few theories as to whathas caused so many U.S. investors to invest in foreign markets. It issupposed that it is either individual investors who want to furthertheir portfolio or in-vesting in foreign markets to try and avoidinterest rates and changes in currency (Hoover, 1993, p. 4). Theinvestment in foreign...
