ECN 302 Paper 4 Draft 1

ECN 302 Paper 4 Draft 1 - Yaoyan Wang ECN 302 Paper 4...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Yaoyan Wang ECN 302 Paper 4 Professor Dempsey Dec 15, 2010 The important role of banks and its regulation On January 28, 2010, at the World Economic Forum, The conversation among business and government leaders no longer revolves around whether to regulate the banking industry more sharply, but rather how to do so. Here in Davos, panels on subjects like executive pay or the international monetary system have wrestled with that issue. In the modern financial system which is consisted of borrows and lenders, banks play an important role. Banks pool small local savings into large amounts, and lend these funds to private borrowers in different ways, like mortgage. Generally, the banks balance sheets contain assets, liabilities and equity. Equity equals assets minus liabilities. The bank’s major assets are composed of reserves (R), holdings of bonds (B) and loans (L). For example, Lucas withdraws $200 from savings account at HSBC, HSBC has $200 less in reserves. On the contrary, if he deposits $200, HSBC
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 2

ECN 302 Paper 4 Draft 1 - Yaoyan Wang ECN 302 Paper 4...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online