Ch 17 - Note: These notes should at best be considered the...

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Note: These notes should at best be considered the outline or summary of lectures delivered in class. Class lectures contain much more material than these notes indicate . Management of FIs The focus is on commercial banks (CM) because CMs are so dominant among the FIs, but also because the management (MGT) issues faced by CMs are quite similar to those faced by all FIs. To understand the mgt issues one must understand the balances sheet of CMs. Also, the business of banking is really one of asset transformation (note that industrial firms too are involved in “asset transformation” – they buy various inputs, such as steel, plastic, wood, cloth and transform these “assets” to cars, TV sets, etc.). Banks sell liabilities – such as deposits and short-term securities (“borrowings”) – and buy assets – reserves, loans, etc. Study Table 17.1 of your text: on the Asset (uses of funds) side of the Bal Sheet we have Reserves; Securities; Loans; and Other assets. On the
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This note was uploaded on 09/08/2010 for the course BUS 171A at San Jose State University .

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Ch 17 - Note: These notes should at best be considered the...

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