Financial markets and institutions:
Gespeichert in:
| Hauptverfasser: | , |
|---|---|
| Format: | Buch |
| Sprache: | English |
| Veröffentlicht: |
Harlow [u.a.]
Financial Times Prentice Hall
2000
|
| Ausgabe: | 3. ed. |
| Schlagworte: | |
| Online-Zugang: | Inhaltsverzeichnis |
| Beschreibung: | XIV, 403 S. graph. Darst. |
| ISBN: | 0201619067 |
Internformat
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Datensatz im Suchindex
| _version_ | 1804128116977696768 |
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| adam_text | ¦ I Contents in Detail ix
Preface xxvii
About the Author xxxvii
About the Contributing Author xxxviii
PART I INTRODUCTION 1
1 Why Study Financial Markets and Institutions? 3
2 Overview of the Financial System 1 3
PART II PRINCIPLES OF FINANCIAL MARKETS 35
3 Understanding Interest Rates 37
4 The Behavior of Interest Rates 78
5 The Risk and Term Structure of Interest Rates 127
6 The Theory of Efficient Capital Markets 1 57
PART III CENTRAL BANKING AND THE CONDUCT OF
MONETARY POLICY 179
7 Structure of Central Banks and the Federal Reserve System 181
8 Conduct of Monetary Policy: Tools, Coals, and Targets 205
PART IV FINANCIAL MARKETS 249
9 The Money Markets 251
10 The Capital Markets 279
11 The Mortgage Markets 309
12 The Foreign Exchange Market 331
13 The International Financial System and Monetary Policy 362
PART V THE FINANCIAL INSTITUTIONS INDUSTRY 387
14 Theory of Financial Structure 389
15 The Banking Firm and Bank Management 421
16 Commercial Banking Industry: Structure and Competition 459
XI7 Thrifts: Savings and Loans and Credit Unions 489
18 Banking Regulation 515
19 Insurance Companies and Pension Funds 546
v
CONTENTS IN BRIEF
20 Finance Companies and Financial Conglomerates 574
21 Securities Firms 590
PART VI THE MANAGEMENT OF FINANCIAL INSTITUTIONS 617
22 Risk Management in Financial Institutions 619
23 Hedging with Financial Derivatives I: Forwards and Futures 641
24 Hedging with Financial Derivatives II: Options and Swaps 669
GLOSSARY C 1
ANSWERS TO SELECTED QUESTIONS
AND PROBLEMS A 1
INDEX II
¦ I la ^^^^^
Preface xxvii
About the Author xxxvii
About the Contributing Author xxxviii
BHBEI^^I INTRODUCTION i
¦ chapter 1 Why Study Financial Markets and Institutions? 3
Preview 3
Why Study Financial Markets? 3
Debt Markets and Interest Rates 4
The Stock Market 5
The Foreign Exchange Market 7
Why Study Financial Institutions? 8
Central Banks and the Conduct of Monetary Policy 8
Structure of the Financial System 8
Banks and Other Financial Institutions 9
Financial Innovation 9
Managing Risk in Financial Institutions 9
Applied Managerial Perspective 10
How We Will Study Financial Markets and Institutions 10
Concluding Remarks 11
¦ Summary 11
¦ Key Terms 12
¦ Questions and Problems 12
¦ chapter 2 Overview of the Financial System 13
Preview 13
Function of the Financial Markets 14
Structure of the Financial Markets 1 6
Debt and Equity Markets 1 6
Primary and Secondary Markets 1 7
Exchanges and Over the counter Markets 1 7
Money and Capital Markets 1 8
Summary, Key Terms, and Questions and Problems appear at the end of each chapter.
CONTENTS
Internationalization of Financial Markets 18 t
International Bond Market, Eurobonds, and Eurocurrencies 1 9
World Stock Markets 19
Function of Financial Intermediaries 20
FOLLOWING THE FINANCIAL NEWS Foreign Stock Market Indexes 20
Transaction Costs 21
¦ BOX 1 The Importance of Financial Intermediaries to Securities Markets: An
International Comparison 21
Asymmetric Information: Adverse Selection and Moral Hazard 2 2
Financial Intermediaries 24
Depository Institutions 24
Contractual Savings Institutions 2 6
Investment Intermediaries 27
Regulation of the Financial System 28 *
Increasing Information Available to Investors 28
Ensuring the Soundness of Financial Intermediaries 30
Improving Control of Monetary Policy 31
Financial Regulation Abroad 32
j^^^J PRINCIPLES OF FINANCIAL MARKETS 35
chapter 3 Understanding Interest Rates 37
Preview 37
Measuring Interest Rates 38
Present Value 39
APPLICATION Cost of the S L Bailout: Was It Really Billion? 41
Yield to Maturity 41
¦ BOX 1 Negative T Bill Rates? Japan Shows the Way 50
Other Measures of Interest Rates 51
Current Yield 51
Yield on a Discount Basis 52
APPLICATION Reading the Wall Street Journal The Bond Page 54
FOLLOWING THE FINANCIAL NEWS Treasury Bonds and Notes 55
FOLLOWING THE FINANCIAL NEWS Treasury Bills 57
FOLLOWING THE FINANCIAL NEWS Corporate Bonds 58
The Distinction Between Real and Nominal Interest Rates 58
¦ BOX 2 With TIPS, Real Interest Rates Have Become Observable in the
United States 61
The Distinction Between Interest Rates and Returns 61
Maturity and the Volatility of Bond Returns: Interest Rate Risk 64
¦ BOX 3 Helping Investors Select Desired Interest Rate Risk 65
Reinvestment Risk 65
Summary 66
CONTENTS X
APPLICATION Should Retirees Invest in Gilt Edged Long Term Bonds? 66
THE practicing financial institution MANAGER Calculating Duration to Measure
Interest Rate Risk 67
Calculating Duration 68
Duration and Interest Rate Risk 7 2
CASE STUDY Interest Rates, Bond Yields, and Duration 76
¦ chapter 4 The Behavior of Interest Rates 78
Preview 78
Determinants of Asset Demand 78
Wealth 78
Expected Returns 79
Risk 80
Liquidity 82
Summary 82
Benefits of Diversification 83
Loanable Funds Framework: Supply and Demand in the Bond Market 84
Demand Curve 84
Supply Curve 86
Market Equilibrium 87
Supply and Demand Analysis 88
Changes in Equilibrium Interest Rates 90
Shifts in the Demand for Bonds 90
Shifts in the Supply of Bonds 94
APPLICATION Changes in the Equilibrium Interest Rate Due to Expected Inflation or
Business Cycle Expansions 96
Changes in Expected Inflation: The Fisher Effect 96
Business Cycle Expansion 97
APPLICATION Explaining Low Japanese Interest Rates 100
APPLICATION Reading the Wall Street Journal The Credit Markets Column 100
FOLLOWING THE FINANCIAL NEWS The Credit Markets Column 101
APPLICATION Have Negative Savings Rates in the United States Led to Higher
Interest Rates7 102
Liquidity Preference Framework: Supply and Demand in the Market
for Money 103
Changes in Equilibrium Interest Rates 106
Shifts in the Demand for Money 106
Shifts in the Supply of Money 107
APPLICATION Changes in the Equilibrium Interest Rate Due to Changes in Income, the
Price Level, or the Money Supply 107
Changes in the Price Level 108
Changes in the Money Supply 109
APPLICATION Money and Interest Rates 110
Does a Higher Rate of Growth of the Money Supply Lower Interest Rates7 11 2
,1 CONTENTS
THE PRACTICING FINANCIAL INSTITUTION MANAGER Profiting from
Interest Rate Forecasts 115
FOLLOWING THE FINANCIAL NEWS Forecasting Interest Rates 11 6
CASE STUDY The Behavior of Interest Rates 120
¦ APPENDIX TO CHAPTER 4 Applying the Asset Market Approach to a Commodity
Market: The Case of Cold 121
Supply and Demand in the Cold Market 121
Demand Curve 1 22
Supply Curve 1 22
Market Equilibrium 122
Changes in the Equilibrium Price of Gold 123
Shift in the Demand Curve for Cold 1 2 3
Shifts in the Supply Curve for Cold 124
APPLICATION Changes in the Equilibrium Price of Cold Due to a Rise in
Expected Inflation 1 24
APPLICATION Reading the Wall Street Journal The Commodities Column 125
FOLLOWING THE FINANCIAL NEWS The Commodities Column 1 26
¦ chapter 5 The Risk and Term Structure of Interest Rates 127
Preview 127
Risk Structure of Interest Rates 127
Default Risk 128
APPLICATION The Stock Market Crash of 1987 and the Junk
Bond Treasury Spread 131
APPLICATION What If Treasury Securities Were No Longer Default Free? 1 32
Income Tax Considerations 1 33
APPLICATION Effects of the Clinton Tax Increase on Bond Interest Rates 1 36
Term Structure of Interest Rates 1 36
FOLLOWING THE FINANCIAL NEWS Yield Curves 1 37
Pure Expectations Theory 1 38
Market Segmentation Theory 143
Liquidity Premium Theory 1 44
Evidence on the Term Structure 1 47
Summary 147
APPLICATION Interpreting Yield Curves, 1980 1999 149
THE practicing financial institution manager Using the Term Structure to
Forecast Interest Rates 1 50
CASE STUDY Yield Curve Hypotheses and the Effects of Economic Events 1 56
¦ chapter 6 The Theory of Efficient Capital Markets 1 57
Preview 157
Theory of Rational Expectations 158
Formal Statement of the Theory 15 9
Rationale Behind the Theory 160
Implications of the Theory 160
CONTENTS XIII
Efficient Markets Theory: Rational Expectations in Financial Markets 161
Rationale Behind the Theory 1 64
Stronger Version of Efficient Markets Theory 1 64
Evidence on Efficient Markets Theory 165
Evidence in Favor of Market Efficiency 1 65
¦ BOX 1 An Exception That Proves the Rule: Ivan Boesky 1 66
APPLICATION Should Foreign Exchange Rates Follow a Random Walk? 1 68
Evidence Against Market Efficiency 1 69
Overview of the Evidence on Efficient Markets Theory 1 71
THE PRACTICING FINANCIAL INSTITUTION MANAGER Practical Guide to Investing in the
Stock Market 1 71
¦ BOX 2 Should You Hire an Ape as Your Investment Adviser? 1 72
APPLICATION What Does the Stock Market Crash of 1987 Tell Us About Rational
Expectations and Efficient Markets? 1 74
CASE STUDY Adaptive Expectations, Rational Expectations, Optimal Forecast,
January Effect 177
R^QQ^H CENTRAL BANKING AND THE CONDUCT OF
mKS^^^^^^m MONETARY POLICY 179
¦ chapter 7 Structure of Central Banks and the Federal Reserve System 181
Preview 181
Origins of the Federal Reserve System 181
¦ BOX 1 INSIDE THE FED The Political Genius of the Founders of the Federal
Reserve System 182
Formal Structure of the Federal Reserve System 183
Federal Reserve Banks 1 84
¦ BOX 2 INSIDE THE FED Special Role of the Federal Reserve Bank
of New York 185
Member Banks 1 86
Board of Governors of the Federal Reserve System 1 87
¦ BOX 3 INSIDE THE FED Role of the Research Staff 1 88
Federal Open Market Committee (FOMQ 1 89
The FOMC Meeting 1 89
¦ BOX 4 INSIDE THE FED Green, Blue, and Beige: What Do These Colors Mean
at the Fed? 1 90
¦ BOX 5 INSIDE THE FED The FOMC Directive 191
Informal Structure of the Federal Reserve System 191
¦ BOX 6 INSIDE THE FED Role of Member Banks in the Federal
Reserve System 1 93
How Independent Is the Fed? 194
Structure and Independence of Foreign Central Banks 1 96
Bank of Canada 1 96
Bank of England 196
Bank of Japan 1 97
CONTENTS
European Central Bank 1 98
The Trend Toward Greater Independence 198
Explaining Central Bank Behavior 198
¦ BOX 7 INSIDE THE FED Games the Fed Plays 1 99
Should the Fed Be independent? 200
The Case for Independence 200
The Case Against Independence 201
Central Bank Independence and Macroeconomic Performance in
Seventeen Countries 202
¦ chapter 8 Conduct of Monetary Policy: Tools, Goals, and Targets 205
Preview 205
The Federal Reserve s Balance Sheet 205
Liabilities 206
Assets 207
Open Market Operations 207
Discount Lending 208
The Market for Reserves and the Federal Funds Rate 209
Supply and Demand in the Market for Reserves 209
How Changes in the Tools of Monetary Policy Affect the Federal Funds Rate 211
Tools of Monetary Policy 213
Open Market Operations 21 3
A Day at the Trading Desk 21 3
Discount Policy 21 5
Operation of the Discount Window 215
¦ BOX 1 INSIDE THE FED Why Has Adjustment Credit Borrowing Shrunk to Such
Low Levels? 216
Lender of Last Resort 21 7
¦ BOX 2 INSIDE THE FED Discounting to Troubled Banks: Franklin National and
Continental Illinois 21 7
Announcement Effect 21 8
¦ BOX 3 INSIDE THE FED Discounting to Prevent a Financial Panic: The Black
Monday Stock Market Crash of 1987 21 9
Reserve Requirements 220
Advantages of Open Market Operations over the Other Tools 220
Goals of Monetary Policy 221
High Employ men t 221
Economic Growth 222
Price Stability 222
¦ BOX 4 The Crowing European Commitment to Price Stability 223
Interest Rate Stability 223
Stability of Financial Markets 223
Stability in Foreign Exchange Markets 224
Conflict Among Goals 224
Central Bank Strategy: Use of Targets 224
CONTENTS XV
Choosing the Targets 226
Criteria for Choosing Intermediate Targets 228
Criteria for Choosing Operating Targets 229
Fed Policy Procedures: Historical Perspective 230
The Early Years: Discount Policy as the Primary Tool 230
Discovery of Open Market Operations 131
The Great Depression 2 31
¦ BOX 5 INSIDE THE FED Bank Panics of 1930 1933: Why Did the Fed Let
Them Happen? 232
War Finance and the Pegging of Interest Rates: 1942 1951 232
Targeting Money Market Conditions: The 1950s and 1960s 233
Targeting Monetary Aggregates: The 1970s 233
New Fed Operating Procedures: October 1979 October 1982 234
Deemphasis of Monetary Aggregates: October 1982 Early 1990s 237
Federal Funds Targeting Again: Early 1990s and Beyond 237
International Considerations 238
Monetary Targeting in Other Countries 238
¦ BOX 6 International Policy Coordination: The Plaza Agreement and the Louvre
Accord 239
United Kingdom 239
Canada 240
Germany 240
Japan 241
Lessons from the Monetary Targeting Experiences 242
The New International Trend in Monetary Policy Strategy:
Inflation Targeting 242
New Zealand 242
Canada 243
United Kingdom 243
Lessons from Inflation Targeting Experiences 244
THE PRACTICING FINANCIAL INSTITUTION MANAGER Using a Fed Watcher 244
j|m^23^HFINANCIAL MARKETS 249
¦ chapter 9 The Money Markets 251
Preview 251
The Money Markets Defined 251
Why Do We Need the Money Markets? 252
Cost Advantages 253
The Purpose of the Money Markets 253
Who Participates in the Money Markets7 254
U.S. Treasury Department 255
Federal Reserve System 255
V| CONTENTS
Commercial Banks 255
Businesses 255
Investment and Securities Firms 256
Individuals 257
Money Market Instruments 257
Treasury Bills 257
APPLICATION Discounting the Price of Treasury Securities to Pay
the Interest 258
¦ BOX 1 Treasury Bill Auctions Co Haywire 261
Federal Funds 262
Repurchase Agreements 263
Negotiable Certificates of Deposit 264
Commercial Paper 265
Banker s Acceptances 267
Eurodollars 269
¦ BOX 2 Ironic Birth of the Eurodollar Market 270
Comparing Money Market Securities 271
Interest Rates 271
Liquidity 271
Money Market Mutual Funds 272
FOLLOWING THE FINANCIAL NEWS Money Market Rates 273
History of Money Market Mutual Funds 21A
Description of Money Market Mutual Funds 274
MM MF Risk 276
Current Trends in MMMFs 216
CASE STUDY Participants in the Money Markets, Weighted Average Returns,
Foreign Alternatives 278
¦ chapter 1O The Capital Markets 279
Preview 279
Purpose of the Capital Market 279
Capital Market Participants 280
Capital Market Trading 280
Organized Securities Exchanges 281
¦ BOX 1 The Most Expensive Seat in Town 281
Over the Counter Markets 282
Capital Market Securities: Bonds 283
Treasury Bonds 283
APPLICATION Interest Rate Risk in Bond Investment 284
Treasury Bond Interest Rates 285
Treasury STRIPS 285
Agency Bonds 286
Municipal Bonds 287
Risk in the Municipal Bond Market 288
CONTENTS XVII
Corporate Bonds 289
Characteristics of Corporate Bonds 289
Types of Corporate Bonds 292
Financial Guarantees for Bonds 294
Trends in the Bond Market 295
Capital Market Securities: Stock 296
Common Stock Versus Preferred Stock 297
Valuing Stock 298
APPLICATION The Valuation of Common Stock 298
FOLLOWING THE FINANCIAL NEWS Stock Prices 299
Stock Market Indexes 300
¦ BOX 2 History of the Dow Jones Industrial Average 301
Buying Foreign Stocks 301
Public Issues of Stocks and Bonds 302
Using Investment Bankers 303
Private Placement 305
CASE STUDY Capital Markets, Comparing Weighted Average Returns Versus
Money Markets 308
¦ chapter 1 1 The Mortgage Markets 309
Preview 309
What Are Mortgages? 310
Characteristics of the Residential Mortgage 311
Mortgage Interest Rates 311
APPLICATION The Discount Point Decision 312
Loan Terms 31 3
Mortgage Loan Amortization 31 5
APPLICATION Computing the Payment on Mortgage Loans 31 6
Types of Mortgage Loans 317
Insured and Conventional Mortgages 31 7
Fixed and Adjustable Rate Mortgages 31 8
Other Types of Mortgages 31 8
Mortgage Lending Institutions 320
Loan Servicing 321
Secondary Mortgage Market 322
Mortgage Backed Securities 323
What Is a Mortgage Backed Security7 323
Types of Pass Through Securities 325
Mortgage Backed Securities Clearing Corporation 326
FOLLOWING THE FINANCIAL NEWS Mortgage Backed Securities 326
The Impact of Securitized Mortgages on the Mortgage Market 327
CASE STUDY Mortgage Loans, Qualifying for a Mortgage, Finding the Lowest Interest
Rate, Effective Cost of the Loan, Prepayment Options 329
XV||| CONTENTS
¦ chapter 12 The Foreign Exchange Market 331
Preview 331
Foreign Exchange Market 333
What Are Foreign Exchange Rates? 333
Why Are Exchange Rates Important? 333
FOLLOWING THE FINANCIAL NEWS Foreign Exchange Rates 334
How Is Foreign Exchange Traded? 335
Exchange Rates in the Long Run 336
Law of One Price 336
Theory of Purchasing Power Parity 337
Why the Theory of Purchasing Power Parity Cannot Fully Explain
Exchange Rates 337
Factors That Affect Exchange Rates in the Long Run 338
Exchange Rates in the Short Run 340
Comparing Expected Returns on Domestic and Foreign Deposits 341
Interest Parity Condition 343
Eguilibrium in the Foreign Exchange Market 344
Explaining Changes in Exchange Rates 346
Shifts in the Expected Return Schedule for Foreign Deposits 347
Shifts in the Expected Return Schedule for Domestic Deposits 349
APPLICATION Changes in the Equilibrium Exchange Rate: Two Examples 351
Changes in the Money Supply 352
Exchange Rate Overshooting 353
APPLICATION Why Are Exchange Rates So Volatile? 354
APPLICATION The Dollar and Interest Rates, 1973 1998 355
APPLICATION Reading the Wall Street Journal: The Foreign
Exchange Column 356
FOLLOWING THE FINANCIAL NEWS The Foreign Exchange Column 357
THE PRACTICING FINANCIAL INSTITUTION MANAGER Profiting from Foreign
Exchange Forecasts 358
CASE STUDY Europe s New Currency and Financing under Interest
Parity Condition 361
¦ chapter 13 The International Financial System and Monetary Policy 362
Preview 362
Intervention in the Foreign Exchange Market 362
Foreign Exchange Intervention and the Money Supply 362
¦ BOX 1 INSIDE THE FED A Day at the Federal Reserve Bank of New York s
Foreign Exchange Desk 363
Unsteniized Intervention 365
Sterilized Intervention 366
Balance of Payments 367
FOLLOWING THE FINANCIAL NEWS The Balance of Payments 368
Current Account 369
Capital Account 370
CONTENTS XIX
Official Reserve Transactions Balance 370
Methods of Financing the Balance of Payments 370
Evolution of the International Financial System 371
Cold Standard 371
Bretton Woods System and the IMF 372
¦ BOX 2 Argentina s Currency Board 376
Managed Float 376
European Monetary System (EMS) 511
APPLICATION The Foreign Exchange Crisis of September 1992 378
THE PRACTICING FINANCIAL INSTITUTION MANAGER Profiting from a Foreign
Exchange Crisis 380
APPLICATION The Mexican Peso Crisis of December 1994 381
APPLICATION The East Asian Currency Crisis of 1997 381
International Considerations and Monetary Policy 382
Direct Effects of the Foreign Exchange Market on the Money Supply 382
Balance of Payments Considerations 383
Exchange Rate Considerations 384
PH^H^^JtHE FINANCIAL INSTITUTIONS INDUSTRY 387
¦ chapter 14 Theory of Financial Structure 389
Preview 389
Basic Puzzles About Financial Structure Throughout the World 389
Transaction Costs 393
How Transaction Costs Influence Financial Structure 393
How Financial Intermediaries Reduce Transaction Costs 394
Asymmetric Information: Adverse Selection and Moral Hazard 395
The Lemons Problem: How Adverse Selection Influences
Financial Structure 396
Lemons in the Stock and Bond Markets 396
Tools to Help Solve Adverse Selection Problems 397
How Moral Hazard Affects the Choice Between Debt and
Equity Contracts 401
Moral Hazard in Equity Contracts: The Principal Agent Problem 401
¦ BOX 1 Hollywood Accounting : Was Forrest Gump a
Money Loser? 402
Tools to Help Solve the Principal Agent Problem 403
How Moral Hazard Influences Financial Structure in Debt Markets 405
Tools to Help Solve Moral Hazard in Debt Contracts 405
Summary 407
APPLICATION Financial Development and Economic Growth 408
Financial Crises and Aggregate Economic Activity 409
Factors Causing Financial Crises 409
APPLICATION Financial Crises in the United States 412
xx CONTENTS
¦ BOX 2 Case Study of a Financial Crisis: The Great Depression 414
APPLICATION Financial Crises in Emerging Market Countries: Mexico, 1994 1995,
and East Asia, 1997 1998 415
¦ chapter 15 The Banking Firm and Bank Management 421
Preview 421
The Bank Balance Sheet 421
Liabilities 422
Assets 424
¦ BOX 1 Understanding Loan Loss Reserves 425
Basic Operation of a Bank 426
General Principles of Bank Management 429
Liquidity Management and the Role of Reserves 429
Asset Management 432
Liability Management 433
Capital Adequacy Management 434
THE PRACTICING FINANCIAL INSTITUTION MANAGER Strategies for Managing
Bank Capital 437
application Did the Capital Crunch Cause a Credit Crunch in the
Early 1990s? 437
Off Baiance Sheet Activities 438
Loan Sales 438
Generation of Fee Income 439
Trading Activities and Risk Management Techniques 439
¦ BOX 2 Barings, Daiwa, and Sumitomo: Rogue Traders and the
Principal Agent Problem 440
Measuring Bank Performance 441
Bank s Income Statement 441
Measures of Bank Performance 443
Recent Trends in Bank Performance Measures 444
Financial Innovation 445
Responses to Changes in Demand Conditions 446
Responses to Changes in Supply Conditions 447
Avoidance of Existing Regulations 449
THE PRACTICING FINANCIAL INSTITUTION MANAGER Profiting from a New Financial
Product: A Case Study of Treasury Strips 452
CASE STUDY Bank Performance Analysis 456
¦ chapter 16 Commercial Banking Industry: Structure and Competition 459
Preview 459
Historical Development of the Banking System 459
Multiple Regulatory Agencies 462
Structure of the U.S. Commercial Banking Industry 462
Restrictions on Branching 463
Response to Branching Restrictions 464
CONTENTS XXI
Bank Consolidation and Nationwide Banking 466
Riegle Neal Interstate Banking and Branching Efficiency Act of 1994 467
What Will the Structure of the U.S. Banking Industry Look Like in
the Future? 468
¦ BOX 1 Comparison of Banking Structure in the United States
and Abroad 468
Are Bank Consolidation and Nationwide Banking Good Things? 469
Separation of the Banking and Securities Industries 470
Repeal of the Class Steagall Act 470
¦ BOX 2 The Citicorp Travelers Merger 473
Separation of the Banking and Securities Industries in
Other Countries 473
International Banking 474
Eurodollar Market 474
Structure of U.S. Banking Overseas 474
Foreign Banks in the United States 476
Financial Innovation and the Decline of Traditional Banking 477
Behind the Decline: Four Financial Innovations 478
Decline of Traditional Banking 480
Reasons for the Decline 482
Banks Responses 485
Decline of Traditional Banking in Other Industrialized Countries 486
¦ chapter 1 7 Thrifts: Savings and Loans and Credit Unions 489
Preview 489
Mutual Savings Banks 490
Savings and Loan Associations 491
Mutual Saving Banks and Savings and Loans Compared 492
Savings and Loans in Trouble: The Thrift Crisis 492
Later Stages of the Crisis: Regulatory Forbearance 493
Competitive Equality in Banking Act of 1987 495
Political Economy of the Savings and Loan Crisis 495
Principal Agent Problem for Regulators and Politicians 495
APPLICATION Principal Agent Problem in Action: Charles Keating and the Lincoln
Savings and Loan Scandal 496
Savings and Loan Bailout: Financial Institutions Reform, Recovery, and
Enforcement Act of 1 989 498
The Savings and Loan Industry Today 500
Number of Institutions 500
S L Size 500
S L Assets 501
S L Liabilities and Net Worth 502
Capital 503
Profitability 503
The Future of the Savings and Loan Industry 504
XXII CONTENTS
Credit Unions 506
History and Organization 506
Sources of Funds 511
Uses of Funds 511
Advantages and Disadvantages of Credit Unions 51 2
The Future of Credit Unions 51 2
¦ chapter 18 Banking Regulation 515 %
Preview 515
Asymmetric Information and Bank Regulation 515
Government Safety Net: Deposit Insurance and the FDIC 51 5
¦ BOX 1 A Tale of Two Bank Collapses: Bank of New England and Freedom
National Bank 51 9
Restrictions on Asset Holding and Bank Capital Requirements 520
¦ BOX 2 The Basel Accord on Risk Based Capital Requirements 521
Bank Supervision: Chartering and Examination 521
A New Trend in Bank Supervision: Assessment of Risk Management 523
Disclosure Requirements 524
Consumer Protection 524
¦ BOX 3 New Zealand s Disclosure Based Experiment in
Bank Regulation 525
¦ BOX A Political Hot Button: The Community Reinvestment Act 526
Restrictions on Competition 526
Separation of the Banking and Securities Industries: The Class Steagall Act 526
International Banking Regulation 527
Problems in Regulating International Banking 527
Summary 527
¦ BOX 5 The BCCI Scandal 529
The 1 980s U.S. Banking Crisis 530
Federal Deposit Insurance Corporation Improvement Act of 1991 531
¦ BOX 6 The SAIF Fix and the Future of the S L Industry 532
Restrictions on Competition 532
APPLICATION Evaluating FDICIA and Other Proposed Reforms of the Banking
Regulatory System 533
Limits on the Scope of Deposit Insurance 534
Prompt Corrective Action 535
Risk Based Insurance Premiums 535
Other FDICIA Provisions 536
Other Proposed Changes in Banking Regulations 536
Overall Evaluation 537
Banking Crises Throughout the World 538
Scandinavia 538
Latin America 539
Russia and Eastern Europe 539
Japan 540
CONTENTS XXIII
East Asia 541
Deja Vu All Over Again 542
THE PRACTICING FINANCIAL INSTITUTION MANAGER Calculating Capital
Requirements 542
¦ chapter 19 Insurance Companies and Pension Funds 546
Preview 546
Insurance Companies 547
Fundamentals of Insurance 548
Adverse Selection and Moral Hazard in Insurance 548
Selling Insurance 549
Growth and Organization of Insurance Companies 550
¦ BOX 1 Insurance Agent: The Customer s Ally 550
Types of Insurance 551
¦ BOX 2 The Woes of Lloyd s of London 552
Life Insurance 552
Health Insurance 557
Property and Casualty Insurance 558
Insurance Regulation 559
THE PRACTICING FINANCIAL INSTITUTION MANAGER Insurance Management 560
Pensions 563
Types of Pensions 564
Defined Benefit Pension Plans 564
Defined Contribution Pension Plans 564
Private and Public Pension Plans 564
¦ BOX 3 Power to the Pensions 567
Regulation of Pension Plans 569
Employee Retirement Income Security Act 569
Individual Retirement Plans 570
Private and Public Pension Plans 564
¦ BOX 4 The Perils of Penny Benny: A Repeat of the S L Bailout? 571
The Future of Pension Funds 571
¦ chapter 2O Finance Companies and Financial Conglomerates 574
Preview 574
History of Finance Companies 574
Purpose of Finance Companies 575
Risk in Finance Companies 576
Types of Finance Companies 577
Business (Commercial] Finance Companies 577
Consumer Finance Companies 580
Sales Finance Companies 581
¦ BOX t The Expansion of Ford Motor Credit 582
Regulation of Finance Companies 582
XX|V CONTENTS
Finance Company Balance Sheet 583
Assets 584
Liabilities 584
Income 584
Finance Company Growth 584
Financial Conglomerates 586
CASE STUDY Purchase of a Finance Company, Analysis of Balance Sheet, Risk
Difference Relative to a Bank, Leasing Function 589
¦ chapter 21 Securities Firms 590
Preview 590
Investment Banks 591
Underwriting Stocks and Bonds 592
FOLLOWING THE FINANCIAL NEWS New Securities Issues 596
Private Placements 597
Mergers and Acquisitions 597
Securities Brokers and Dealers 598
Brokerage Services 598
¦ BOX 1 Using the Limit Order Book 600
Securities Dealers 602
Regulation of Securities Firms 603
Relationship Between Securities Firms and Commercial Banks 604
Investment Funds 605
Types of Investment Funds 606
Ownership of Mutual Funds 607
Fee Structure of Investment Funds 609
APPLICATION Calculating a Mutual Fund s Net Asset Value 610
Regulation of Mutual Funds 610
Hedge Funds 610
¦ BOX 2 The Long Term Capital Debacle 61 3
51flSSEK9THE: MANAGEMENT OF FINANCIAL INSTITUTIONS 6tT
¦ chapter 22 Risk Management in Financial Institutions 619
Preview 619
Managing Credit Risk 619
Screening and Monitoring 620
Long Term Customer Relationships 621
Loan Commitments 622
Collateral 622
Compensating Balances 623
Credit Rationing 623
CONTENTS XXV
Managing Interest Rate Risk 624
Income Gap Analysis 626
Duration Gap Analysis 628
Example of a Nonbanking Financial Institution 632
Some Problems with Income and Duration Cap Analysis 634
THE PRACTICING FINANCIAL INSTITUTION MANAGER Strategies for Managing
Interest Rate Risk 635
CASE STUDY Calculating and Comparing Cap, Duration, and Risk
Management Alternatives 638
¦ chapter 23 Hedging with Financial Derivatives I: Forwards and Futures 641
Preview 641
Forward Markets 641
Interest Rate Forward Contracts 642
Hedging with Interest Rate Forward Contracts 642
Pros and Cons of Forward Contracts 642
Financial Futures Markets 643
Financial Futures Contracts 643
FOLLOWING THE FINANCIAL NEWS Financial Futures 644
Organization of Trading in Financial Futures Markets 646
Globalization of Financial Futures Markets 646
Explaining the Success of Futures Markets 648
¦ BOX 1 The Hunt Brothers and the Silver Crash 649
THE practicing financial institution manager Hedging Interest Rate Risk with
Financial Futures 650
Some Problems with Financial Futures Market Hedges 657
Stock Index Futures 658
Stock Index Futures Contracts 658
FOLLOWING THE FINANCIAL NEWS Stock Index Futures 659
THE PRACTICING FINANCIAL INSTITUTION MANAGER Using Stock
Index Futures 660
¦ BOX 2 Program Trading and Portfolio Insurance: Were They to Blame for the
Stock Market Crash of 1987? 663
THE PRACTICING FINANCIAL INSTITUTION MANAGER Hedging Foreign Exchange Risk
with Forward and Futures Contracts 664
CASE STUDY Micro Hedge, Macro Hedge, Managing Interest Rate Risk, and
Market Value 667
¦ chapter 24 Hedging with Financial Derivatives II: Options and Swaps 669
Preview 669
Options 669
FOLLOWING THE FINANCIAL NEWS Futures Options 670
Option Contracts 671
Profits and Losses on Option and Futures Contracts 67 2
XXVI CONTENTS
Factors Affecting the Prices of Option Premiums 675
Summary 676
THE PRACTICING FINANCIAL INSTITUTION MANAGER Hedging Interest Rate Risk with
Futures Options 677
Interest Rate Swaps 681
Interest Rate Swap Contracts 682
Advantages of Interest Rate Swaps 683
Disadvantages of Interest Rate Swaps 684
Financial Intermediaries in Interest Rate Swaps 686
THE PRACTICING FINANCIAL INSTITUTION MANAGER Hedging Interest Rate Risk with
Interest Rate Swaps 687
THE PRACTICING FINANCIAL INSTITUTION MANAGER Hedging Foreign Exchange Risk
with Currency Options and Currency Swaps 690
application Are Financial Derivatives a Worldwide Time Bomb? 691
¦ BOX 1 The Orange County Bankruptcy 692
CASE STUDY Using Option Contracts and Currency Swaps to Manage
Interest Rate Risk 696
GLOSSARY G 1
ANSWERS TO SELECTED QUESTIONS
AND PROBLEMS A 1
INDEX II
|
| any_adam_object | 1 |
| author | Howells, Peter G. A. 1947- Bain, Keith 1942- |
| author_GND | (DE-588)123594561 (DE-588)124759750 |
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| author_role | aut aut |
| author_sort | Howells, Peter G. A. 1947- |
| author_variant | p g a h pga pgah k b kb |
| building | Verbundindex |
| bvnumber | BV013342886 |
| callnumber-first | H - Social Science |
| callnumber-label | HG186 |
| callnumber-raw | HG186.G7 |
| callnumber-search | HG186.G7 |
| callnumber-sort | HG 3186 G7 |
| callnumber-subject | HG - Finance |
| classification_rvk | QK 010 |
| ctrlnum | (OCoLC)247799895 (DE-599)BVBBV013342886 |
| dewey-full | 332.1/0941 |
| dewey-hundreds | 300 - Social sciences |
| dewey-ones | 332 - Financial economics |
| dewey-raw | 332.1/0941 |
| dewey-search | 332.1/0941 |
| dewey-sort | 3332.1 3941 |
| dewey-tens | 330 - Economics |
| discipline | Wirtschaftswissenschaften |
| edition | 3. ed. |
| format | Book |
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| id | DE-604.BV013342886 |
| illustrated | Illustrated |
| indexdate | 2024-07-09T18:44:08Z |
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| isbn | 0201619067 |
| language | English |
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| physical | XIV, 403 S. graph. Darst. |
| publishDate | 2000 |
| publishDateSearch | 2000 |
| publishDateSort | 2000 |
| publisher | Financial Times Prentice Hall |
| record_format | marc |
| spelling | Howells, Peter G. A. 1947- Verfasser (DE-588)123594561 aut Financial markets and institutions Peter Howells and Keith Bain 3. ed. Harlow [u.a.] Financial Times Prentice Hall 2000 XIV, 403 S. graph. Darst. txt rdacontent n rdamedia nc rdacarrier Finanzsektor / Finanzmarkt / Theorie / Großbritannien Kreditwesen (DE-588)4032950-1 gnd rswk-swf Kreditmarkt (DE-588)4073788-3 gnd rswk-swf Großbritannien (DE-588)4022153-2 gnd rswk-swf (DE-588)4123623-3 Lehrbuch gnd-content Großbritannien (DE-588)4022153-2 g Kreditwesen (DE-588)4032950-1 s 1\p DE-604 Kreditmarkt (DE-588)4073788-3 s 2\p DE-604 Bain, Keith 1942- Verfasser (DE-588)124759750 aut HBZ Datenaustausch application/pdf http://bvbr.bib-bvb.de:8991/F?func=service&doc_library=BVB01&local_base=BVB01&doc_number=009098928&sequence=000002&line_number=0001&func_code=DB_RECORDS&service_type=MEDIA Inhaltsverzeichnis 1\p cgwrk 20201028 DE-101 https://d-nb.info/provenance/plan#cgwrk 2\p cgwrk 20201028 DE-101 https://d-nb.info/provenance/plan#cgwrk |
| spellingShingle | Howells, Peter G. A. 1947- Bain, Keith 1942- Financial markets and institutions Finanzsektor / Finanzmarkt / Theorie / Großbritannien Kreditwesen (DE-588)4032950-1 gnd Kreditmarkt (DE-588)4073788-3 gnd |
| subject_GND | (DE-588)4032950-1 (DE-588)4073788-3 (DE-588)4022153-2 (DE-588)4123623-3 |
| title | Financial markets and institutions |
| title_auth | Financial markets and institutions |
| title_exact_search | Financial markets and institutions |
| title_full | Financial markets and institutions Peter Howells and Keith Bain |
| title_fullStr | Financial markets and institutions Peter Howells and Keith Bain |
| title_full_unstemmed | Financial markets and institutions Peter Howells and Keith Bain |
| title_short | Financial markets and institutions |
| title_sort | financial markets and institutions |
| topic | Finanzsektor / Finanzmarkt / Theorie / Großbritannien Kreditwesen (DE-588)4032950-1 gnd Kreditmarkt (DE-588)4073788-3 gnd |
| topic_facet | Finanzsektor / Finanzmarkt / Theorie / Großbritannien Kreditwesen Kreditmarkt Großbritannien Lehrbuch |
| url | http://bvbr.bib-bvb.de:8991/F?func=service&doc_library=BVB01&local_base=BVB01&doc_number=009098928&sequence=000002&line_number=0001&func_code=DB_RECORDS&service_type=MEDIA |
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