BANKSCLASS

BANKSCLASS - 1 Banking Basics Structure Management ...

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Unformatted text preview: 1 Banking Basics: Structure, Management ¡ Commercial Bank Balance Sheet ¢ Sources and uses of funds ¡ Bank production process ¢ Asset transformation ¢ Provision of services ¢ Leverage ¡ Bank Management Concepts 1 ¢ Liquidity Management ¢ Asset Management ¢ Liability Management ¢ Capital Management ¢ Credit Risk Management ¢ Interest Rate Risk Management ¢ Trading Risk ¡ Banking Crises In The News 2 Course Issues ¢ Midterm qs? ¢ Course ideas – Fri (starts 11/7) ¢ Extra Credit Wiki Projects - coming 3 coming ¢ investment game catch up 2 Banking 4 Banks (aka Depository Institutions) ¡ Depository Institutions ¢ Financial intermediary S->I ¢ Deposits -> loans, securities ¢ Financial deregulation, innovation, globalization Commercial Banks $11 5 trillion in Assets 5 ¡ Commercial Banks - $11.5 trillion in Assets ¢ 80% of bank assets ¢ Role in money creation and monetary policy ¡ Thrifts – Saving and Loans, Mutual Savings Banks, Credit Unions (and retail banks) What Do Banks Do? ¢ Earnings from Interest rate spreads, fees, other ¢ Asset transformation ¡ savings deposit → loan ¡ borrow short- lend long ¢ Lower transactions costs ¡ Information etc 6 ¡ Information, etc ¢ Deal With Asymmetric Information Problems ¡ adverse selection ¢ Credit checks, screening, relationships ¡ moral hazard ¢ Compensating balances, relationships 3...
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BANKSCLASS - 1 Banking Basics Structure Management ...

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