TABLE OF CONTENTS -- Acknowledgments iii -- bstract iv -- ısa Ozet v --Table of Contents vi --List of Tables vii --List of Figures ix --Introduction I -- CHAPTER 1 --THE THEORETICAL BASIS OF FINANCIAL INTERMEDIATION --1.1. Traditional Theories of Financial Intermediation 3 --1.1.1. Transaction Costs Based Theories 3 --1.1.2. Information Based Theories 5 --1.2. Modern Theories of Financial Intermediation 9 --CHAPTER II --THE ROLES OF SECURITIES FIRMS --II. 1. Transaction Costs Reduction Role 11 --II.2. Capital Raising Role 11 --II.3. Liquidity Mechanism Role 11 --II.4. Financial Engineering Role 32 --II.5. Financial Advice Role 12 --II.6. Risk Management Role 12 -- --CHAPTER III --CAPITAL MARKET INTERMEDIATION IN U.S.A. --III.1. Characteristics of Capital Market Intermediation in U.S.A 13 --III. 1.1. The Classifications of Securities Firms 13 --III. 1.1.1. Member Firms 13 --111.1.1.2. Investment Banks 14 --III. 1.1.3. Over-The-Counter Firm 14 --III. 1.2. Membership on Stock Exchanges 15 --III. 1.2. J. Membership in New York Stock Exchange (NYSE) 15 --III A.2.2. Membership in American Stock Exchange (AMEX) 15 --III. 1.2.3. Membership in Over-The-Counter Market (OTC) 16 --III. 1.3. The Types of Brokers and Dealers on Securities Markets 16 --III. 1.3.1. Commission House Broker 17 --III. 1.3.2. Two-Dollar Broker 17 --III. 1.3.3. Registered Floor Trader 17 --III. 1.3.4. Bond Broker 17 --III. 1.3.5. Specialist 17 --III.2. The Legislative Framework 18 --III.2.1. Securities act of 1933 19 --III.2.2. Glass- Steagall Act 19 --III.2.3. Securities Exchange Act of 1934 23 --III.2.4. The Maloney Act 24 --III.2.5. Investment Company Act of 1940 24 --III.2.6. Investment Advisory Act of 1940 26 --III.2.7. Securities Investor Protection Act of 1970 26 --III.2.8. The Securities Acts Amendments of 1975 26 --III.2.9. The National Securities Markets improvement Act of 1996 27 --III.2.10. mGramm-Leach-BlileyActof 1999 27 --III.3. Capital Requirements of U.S. Securities Firms 29 --III.3.1. The Purpose of Regulatory Capital in Securities Firms 29 --III.3.2. Risks Faced By Securities Firms 29 --III.3.LI. Market Risk 29 --III.3.1.2. Liquidity Risk 30 --III.3.L3. Credit Risk 30 --III.3.L4. Operational Risk 31 --III.3.1.5. Legal Risk 33 --III.3.1.6. Systemic Risk 31 --III.3.3. Alternative Systems for Setting Regulatory Capital Requirements 32 --III.3.4. The SEC Net Capital Rule 32 --III.3.1.1. Basic Capital Method 33 --III.3.1.2. Alternative Capital Method 33 --III.3.5. Criticism of the SEC Net Capital Rule 34 --III.4. Participants of Capital Markets in U.S.A 35 --III.4.1. Households 35 --III.4.2. Institutions 37 --III.4.2.1. Declining Costs of Trading 39 --III.4.2.2. Impact of the Institutionalization 39 --III.4.3. Demand Characteristics 39 --III.5. Services Offered by Securities Firms in U.S.A 40 --III.5.1. Capital Markets Services 40 --III.5.1.1. Underwriting 40 --III. 5.1.2. Secondary Market Activities 40 --III.1.3. Brokerage Activities 41 --III.5.1.4. Research 41 --III.5.1.5. Hedging and Risk Management 41 --III.5.2. Corporate Finance Services 41 --III.5.2.1. Mergers and Acquisitions 42 --III.5.2.2. Recapitalization 42 --III.5.23. Real estate and other Special Transactions 42 --III.5.2.4. Merchant Banking 42 --III.5.3. Investment Management and Investor Services 43 --III.5.3.1. Investment Management for Institutions and Individuals 43 --III.5.3.2. Investor Services 43 --III. 6. Pricing Behaviour and Competition among Securities Firms in U.S.A 44 --III.6.1. Fixed Commission Rates 44 --III.6.2. Competitive Commissions Rate 45 --III.6.3. Consolidation 47 -- --CHAPTER IV --FUTURE PERSPECTIVE: KEY TRENDS IN CAPITAL MARKETS --IV.1. Online Security Trading 49 --IV.2. Electronic Trading Systems 51 --IV.2.1. Evolution of Electronic Trading 51 --IV.2.2. Electronic Communication Networks (ECNs) 52 --IV.3. Globalization Trends 55 -- --CHAPTER V --CAPITAL MARKET INTERMEDIATION IN TURKEY --V.I. The Sector in Figures 57 --V.2. Licensing 57 --V.3. Capital Adequacy 58 --V.4. Scope of Operations 59 --V.5. Competition 60 -- --CHAPTER VI --RESEARCH DESIGN FOR THE EMPIRICAL INVESTIGATION OF TURKISH AND AMERICAN CAPITAL MARKET INTERMEDIARIES WITH RESPECT --TO THEIR FINANCIAL STRUCTURES --VI. 1. Literature Review 63 --VI.2. Objectives of the Study 63 --VI.3. Sampling and Data Collection Method 67 --VI.3.1.Sampling 67 --Vl.3.2. Data Collection 67 --VI.3.2.1. Data for the United States 67 --VI.3.2.2. Data for Turkey 68 --VI.3.3. Procedures for Computation of Data 68 --VI.3.4. Limitations of Database 68 --VI.4. Variables and Their Operationalizations 69 --VI.5. Conceptual Model 72 -- --CHAPTER VII --METHODOLOGY --VII.1. Examining the Data 73 --VII.2. Factor Analysis 75 --VII.3. Discriminant Analysis 79 --VII.4. Logit Analysis 80 -- --CHAPTER --VIII FINDINGS --VIII.1. Factor Analysis 83 --VIII.1.1. The Data 83 --VIII.1.2. Assessing Appropriateness of Data for the Factor Analysis 83 --VIII.1.2.1. Examining the Correlation Matrix 83 --VIII.1.2.2. Kaiser- Meyer-Oikin 85 --VII1.1.2.3. Barleit's Test of Spherity 85 --VIII.1.3. Factor Extraction 85 --VIII.1.4. The Communalities of the Variables 88 --VIII.1.5. The Rotation Stage 89 --VIII.1.6. Labelling the Factors 90 --VIII.1.7. Factor Scores 93 --VIII.2. Discriminant Analysis 93 --VIII.2.I. The Data 93 --VIII.2.2. Evaluating Significance of Discriminating Variables 94 --VIII.2.3. Estimation of the Discriminant Function 95 --VIII.2.4. The Discriminant Function 97 --VIII.2.5. Discriminant Functions Evaluated at Group Means 98 --VIII.2.6. Classification Results 98 --VIII.3. Logit Analysis 100 --VIII.3.1. Assessing Model Fit 100 --VIII.3.2. Testing for Significance of the Coefficients 102 --VIII.3.3. Classification Results 102 -- --CONCLUSION 105 -- --REFERENCES 113 --Appendix -A : Securities and Exchange Commission Haircuts 119 --Appendix-B : The List of American Securities Firms 122 --Appendix-C : The List of Turkish Securities Firms 123 --Appendix-D : Criticism of BaJance Sheet and Income Statement Formats of Turkish Securities Firms 124.