Book Description :
Genre : Educational, Economics & Finance
Written By : Prof. Dr AP Faure
Book Size : 4.44 Mb
This book presents an introduction to private sector banking (as opposed to central banking). Banks are at the very centre of the financial system. They act as intermediaries between all the four sectors of the economy) and all other financial intermediaries. They are also at the very centre of the money market, the market for short-term debt and deposits, marketable and non-marketable, and the interbank markets. They also create the all-important payments system. The banks are unique in that they are able to create new money (by new bank lending), and this is so because money is whatever is generally accepted as the means of payments / medium of exchange: bank deposits (notes and coins make up a minor part of the money stock). Because of this, and other reasons (moral hazard, for example) banks are also inherently unstable, and require robust regulation and supervision. Also because of this, banks are the target of monetary policy implementation.
Content :
Essence of banking
Learning outcomes
Introduction
The financial system
Principles of banking
The balance sheet of a bank
Bibliography
Money creation
Learning objectives
Introduction
What is money?
Measures of money
Monetary banking institutions
Money and its role
Uniqueness of banks
The cash reserve requirement
Money creation does not start with a bank receiving a deposit
Money creation is not dependent on a cash reserve requirement
Is “money supply” a misnomer?
The money identity and the creation of money
Role of the central bank in money creation
How does a central bank maintain a bank liquidity shortage?
Bibliography
Risk in banking
Learning outcomes
Introduction
The concept of risk
Interest rate risk
Market risk
Liquidity risk
Credit risk
Currency risk
Counterparty risk
Operational risk
Bibliography
Bank models & prudential requirements
Learning outcomes
Introduction
Bank models
Rationale, objectives & principles of regulation
Prudential requirements
Bibliography
Endnotes
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