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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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- Fall '10