Week 1 Lecture Summary - Lecture 1 Introduction to Bank...

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Lecture 1 – Introduction to Bank Financial Management Lecture Summary – Key Focus Points Financial Institutions FIs include depository and non-depository institutions - Depository – banks, building societies, credit unions - Non-depository – insurance, unit trusts and money market corporations - Financial institutions (FIs) are special - Information costs (agency costs) – delegated monitor/information producer - Liquidity – demand deposits and other claims more liquid - Price risk – secondary claims by FIs less price risk; can diversify - Other special attributes? Banks - Assets – consumer, residential and commercial loans - Liabilities – deposits Building societies - Cooperative basis (deposits accepted, loans to members) Credit Unions - Mutually cooperative basis - Linked by common bond – same company, profession etc Functions of FIs - Brokerage - Asset transformation FIs receive special regulatory attention - Negative externalities
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Week 1 Lecture Summary - Lecture 1 Introduction to Bank...

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