III Part Financial Institutions
Chapter 8
An Economic Analysis of Financial Structure Basic Puzzles About Financial Structure Throughout the World Transactions Costs How Transactions Costs Influence Financial Structure How Financial Intermediaries Reduce Transaction Costs Asymmetric Information: Adverse Selection and Moral Hazard The Lemons Problem: How Adverse Selection Influences Financial Structure Lemons in the Stock and Bond Markets Tools to Help Solve Adverse Selection Problems FYI: The Enron Implosion How Moral Hazard Affects the Choice Between Debt and Equity Contracts Moral Hazard in Equity Contracts: The Principal-Agent Problem Tools to Help Solve the Principal-Agent Problem
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How Moral Hazard Influences Financial Structure in Debt Markets Tools to Help Solve Moral Hazard in Debt Contracts Summary Conflicts of Interest Why Do We Care About Conflicts of Interest? Why Do Conflicts of Interest Arise? Conflicts of Interest: The King, Queen, and Jack of the Internet What Has Been Done to Remedy Conflicts of Interest? Conflicts of Interest: The Demise of Arthur Andersen Application: Financial Development and Economic Growth Application: Is China a Counter-Example to the Importance of Financial Development? Financial Crises and Aggregate Economic Activity Factors Causing Financial Crises Application: Financial Crises in the United States FYI: Case Study of a Financial Crisis: The Great Depression Application: Financial Crises in Emerging Market Countries: Mexico, 199495; East Asia, 199798; and Argentina, 20012002 Summary
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Chapter 9
Banking and the Management of Financial Institutions The Bank Balance Sheet Liabilities Assets Basic Banking General Principles of Bank Management Liquidity Management and the Role of Reserves Asset Management Liability Management Capital Adequacy Management Application: Strategies for Managing Bank Capital Application: Did the Capital Crunch Cause a Credit Crunch in the Early 1990s? Managing Credit Risk Screening and Monitoring Long-Term Customer Relationships Loan Commitments Collateral and Compensating Balances Credit Rationing Managing Interest-Rate Risk Gap and Duration Analysis Application: Strategies for Managing Interest-Rate Risk
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Off-Balance-Sheet Activities Loan Sales Generation of Fee Income Trading Activities and Risk Management Techniques Global Box: Barings, Daiwa, Sumitomo, and Allied Irish: Rogue Traders and the Principal-Agent Problem Summary
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Chapter 10
Banking Industry: Structure and Competition Historical Development of the Banking System Multiple Regulatory Agencies Financial Innovation and the Evolution of the Banking Industry Responses to Changes in Demand Interest Conditions: Rate Volatility Responses to Changes in Supply Conditions: Information Technology E-Finance:Will Clicks Dominate Bricks in the Banking Industry? Avoidance of Existing Regulations Financial Innovation and the Decline of Traditional Banking Structure of the U.S. Commercial Banking Industry Restrictions on Branching Response to Branching Restrictions Bank Consolidation and Nationwide Banking E-Finance: Information Technology and Bank Consolidation The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 What Will the Structure of the U.S. Banking Industry Look Like in the Future? Global Box: Comparison of Banking Structure in the United States and Abroad Are Bank Consolidation and Nationwide Banking a Good Thing?
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Separation of Banking and Other Financial Service Industries Erosion of Glass-Steagall The Gramm-Leach-Bliley Financial Services Modernization Act of 1999: Repeal of Glass-Steagall Implications for Financial Consolidation Separation of the Banking and Securities Industries Throughout the World Thrift Industry: Regulation and Structure Savings and Loan Associations Mutual Savings Banks Credit Unions International Banking Eurodollar Market Global Box: The Ironic Birth of the Eurodollar Market Structure of U.S. Banking Overseas Foreign Banks in the United States
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Chapter 11
Economic Analysis of Banking Regulation Asymmetric Information and Bank Regulation Government Safety Net: Deposit Insurance and the FDIC Global Box: The Spread of Government Deposit Insurance Throughout the World: Is This a Good Thing? Restrictions on Asset ...