Chapter 9 All Materials PDF

Chapter 9 All Materials PDF - ECON 330: Money and Banking...

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ECON 330: Money and Banking Fall 2007 Section 1: Tuesday and Thursday, 11:30AM-12:45PM, SMU 104 Section 2: Tuesday and Thursday, 5:00PM-6:15PM, SRO B Prof. J. Santos South Dakota State University Student Learning Objectives: Chapter 9: Banking and the Management of Financial Institutions [1] De&ne, in the context of banking, the term liabilities. [2] Identify, distinguish between, and provide examples of bank liabilities. [3] De&ne, in the context of a bank±s balance sheet, the term bank capital. [4] De&ne, in the context of banking, the term assets. [5] Identify, distinguish between, and provide examples of bank assets. [6] Identify, in general terms, how a typical bank earns pro&t. [7] Use a standard T-account approach to determine how basic bank transactions - withdrawals, deposits, loan initiations and write-o/s, etc. - are re²ected on a bank±s balance sheet. [8] Identify the four primary areas of bank management - liquidity, asset, liability, and capital. [9] Analyze each management area in terms of management±s objectives and constraints. [10] Specify the equation for return on assets (ROA), a basic measure of bank pro&tability that provides information on how e¢ ciently a bank is run. [11] Specify the equation for return on equity (ROE), a basic measure of bank pro&tability that provides information on how well owners are doing on their investment in the bank. [12] Explain the economic signi&cance of the so-called equity multiplier (EM), the amount of assets per dollar of equity capital. [13] Explain why banks screen and monitor their customers, establish long-term customer relationships, extend loan commitments, require collateral and compensating balances, and ration credit.
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[14] Explain why a sudden and unexpected rise in interest rates will reduce bank pro&ts if the bank has more rate-sensitive liabilities than assets. [15] Describe basic gap analysis. [16] Identify and provide examples of o/-balance-sheet activities. 2
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Chapter 9: Banking and the Management of Financial Institutions Econ 330: Money and Banking all 007 Fall 2007 Prof. Joseph Santos Department of Economics South Dakota State University This outline draws from Frederic Mishkin’s Money, Banking and Financial Markets (2007) and, as such, contains copy written material. Please do not quote without proper citation.
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[1] The Bank Balance Sheet [1] The Bank Balance Sheet [2] Liabilities ] Assets [3] Assets [4] Basic Banking [5] Liquidity Management [6] Asset Management [7] Liability Management [8] Capital-Adequacy Management [9] Managing Credit Risk [10] Managing Interest-Rate Risk [11] Off-Balance-Sheet Activities Department of Economics South Dakota State University This outline draws from Frederic Mishkin’s Money, Banking and Financial Markets (2007) and, as such, contains copy written material. Please do not quote without proper citation.
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[2] Liabilities Checkable deposits Non-interest-bearing checking accounts (demand deposits), terest earing NOW (negotiable order of withdrawal) accounts [1] The Bank Balance Sheet [2] Liabilities ] Assets interest-bearing NOW (negotiable order of withdrawal) accounts, and money market deposit accounts.
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Chapter 9 All Materials PDF - ECON 330: Money and Banking...

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