• Ngân hàng tín dụng - Money and banking (lecture 32)Ngân hàng tín dụng - Money and banking (lecture 32)

    Funding needs create a natural conflict between monetary and fiscal policymakers. • Fiscal policymakers also tend to ignore the long-term inflationary effects of their actions. • Politicians often turn to borrowing (instead of taxes) as a way to finance some portion of their spending, but a country can issue only so much debt

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  • Ngân hàng tín dụng - Money and banking (lecture 31)Ngân hàng tín dụng - Money and banking (lecture 31)

    The boom in the past decade with its associated decrease in volatility may have happened because technology sparked a boom just as central banks became better at their jobs. • Policymakers realized that sustainable growth had gone up, so interest rates could be kept low without worrying about inflation, and central banks were redesigned

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  • Ngân hàng tín dụng - Money and banking (lecture 30)Ngân hàng tín dụng - Money and banking (lecture 30)

    Instability in any of those would pose an economy-wide economic risk that diversification could not mitigate. • Thus the job of the central bank is to improve general economic welfare by managing and reducing systematic risk. • It is probably impossible to achieve all five of these objectives simultaneously, and so tradeoffs must be made

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  • Ngân hàng tín dụng - Money and banking (lecture 29)Ngân hàng tín dụng - Money and banking (lecture 29)

    Minimum capital requirements complement these limitations on bank assets • Capital serves as a cushion against declines in the value of the bank’s assets, lowering the likelihood of the bank’s failure, and is a way to reduce the problem of moral hazard

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  • Ngân hàng tín dụng - Money and banking (lecture 28)Ngân hàng tín dụng - Money and banking (lecture 28)

    What matters during a bank run is not whether a bank is solvent but whether it is liquid • Here solvency means that the value of the bank’s assets exceeds its liabilities (positive net worth) • Liquidity refers to the sufficient reserves of the bank to meet withdrawal demands • False rumors that a bank is insolvent can lead to a run which ...

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  • Ngân hàng tín dụng - Money and banking (lecture 27)Ngân hàng tín dụng - Money and banking (lecture 27)

    The Role of Insurance Companies: • Insurance companies pool risk to generate predictable payouts • Adverse selection and moral hazard create problems in the insurance market that are worse than those in the stock and bond markets • Cancer Patients • Fire Insurance

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  • Ngân hàng tín dụng - Money and banking (lecture 26)Ngân hàng tín dụng - Money and banking (lecture 26)

    One of the most important aspects of international banking is the eurodollar market, in which dollar-denominated deposits in foreign banks are exchanged • The eurodollar market was created in response to restrictions on the movement of international capital imposed at the end of World War II with the creation of Bretton Woods system

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  • Tài chính doanh nghiệp - Money and banking (lecture 25)Tài chính doanh nghiệp - Money and banking (lecture 25)

    Banks do not like to meet their deposit outflows by contracting the asset side of the balance sheet because doing so shrinks the size of the bank • Banks can use liability management to obtain additional funds by • borrowing (from the central bank or from another bank) or • by attracting additional deposits (by issuing large CDs)

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  • Tài chính doanh nghiệp - Money and banking (lecture 24)Tài chính doanh nghiệp - Money and banking (lecture 24)

    Net interest income is another measure of profitability; • It is the difference between the interest the bank pays and what it receives • It can also be expressed as a percentage of total assets to yield (net interest margin). It is the bank’s interest rate spread • Well run banks have high net interest income and a high net interest margin...

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  • Tài chính doanh nghiệp - Money and banking (lecture 22)Tài chính doanh nghiệp - Money and banking (lecture 22)

    Adverse Selection in Financial Markets: • The same happens in the bond market • If a lender can not tell whether a borrower is a good or a bad credit risk, the demand for a risk premium will be based on the average risk • Borrowers having good credit risk will not pay higher risk premiums and would withdraw from the market • Only bad credit...

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