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
19 trang | Chia sẻ: thuychi20 | Ngày: 06/04/2020 | Lượt xem: 691 | Lượt tải: 0
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
24 trang | Chia sẻ: thuychi20 | Ngày: 06/04/2020 | Lượt xem: 657 | Lượt tải: 0
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)
23 trang | Chia sẻ: thuychi20 | Ngày: 06/04/2020 | Lượt xem: 713 | Lượt tải: 0
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)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...
31 trang | Chia sẻ: thuychi20 | Ngày: 06/04/2020 | Lượt xem: 721 | Lượt tải: 0
Tài chính doanh nghiệp - Money and banking (lecture 21)The most straightforward economic function of a financial intermediary is to pool the resources of many small savers • To succeed in this endeavor the intermediary must attract substantial numbers of savers • This is the essence of indirect finance, and it means convincing potential depositors of the soundness of the institution • Banks rel...
15 trang | Chia sẻ: thuychi20 | Ngày: 06/04/2020 | Lượt xem: 600 | Lượt tải: 0
Tài chính doanh nghiệp - Money and banking (lecture 20)Shifts in investor psychology may distort prices; both euphoria and depression are contagious • When investors become unjustifiably exuberant about the market’s future prospects, prices rise regardless of the fundamentals, and such mass enthusiasm creates bubbles
32 trang | Chia sẻ: thuychi20 | Ngày: 06/04/2020 | Lượt xem: 677 | Lượt tải: 0
Tài chính doanh nghiệp - Money and banking (lecture 19)Stockholders receive profits only after the firm has paid everyone else, including bondholders • It is as if the stockholders bought the firm by putting up some of their own wealth and borrowing the rest • This borrowing creates leverage, and leverage creates risk
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Tài chính doanh nghiệp - Money and banking (lecture 18)Stocks, also known as common stock or equity, are shares in a firm’s ownership • From their early days, stocks had two important characteristics that today are taken for granted: • the shares are issued in small denominations and • the shares are transferable • Until recently, stockowners received a certificate from the issuing company, but ...
25 trang | Chia sẻ: thuychi20 | Ngày: 06/04/2020 | Lượt xem: 648 | Lượt tải: 0
Tài chính doanh nghiệp - Money and banking (lecture 17)However, expectations theory can not explain why long-term rates are usually above short term rates • In order to explain why the yield curve normally slopes upward, we need to extend the hypothesis to include risk
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