Questions tagged [banking]

Use for questions about banks, their operations, and their role in the broader economic and financial system.

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2
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1answer
122 views

Measuring demand for banking services - (Maximum) Market Size

I am in need of a variable measuring "demand for banking services" in general, on a country level. Specifically the (maximum) size of the market for banking services for a given country. This will be ...
4
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1answer
87 views

Can one bank be the correspondent bank of itself?

http://www.investopedia.com/terms/c/correspondent-bank.asp Correspondent bank is like a delegator in a country to operate on behalf of the delegatee who doesn't normally has established business in ...
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0answers
42 views

Is Eurodollar borrowing close substitute for Fed funds borrowing?

It is often stated that eurodollar borrowing is clost substitute for Fed funds borrowing. In other words, when US banks cannot fund themselves domestically, they might go to the eurodollar market and ...
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0answers
58 views

Is the ECB a lender of last resort for european governments?

One of the usual functions of a Central Bank is to be the last resort of commercial banks, and governments. Does the ECB behave in this usual way toward European Governments? What about toward banks?...
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3answers
519 views

Why isn't the Fed funds rate greater than interest rate on loans to the pubic

First of all, fed funds rate is the rate banks borrow reserves' from each other. Interest rate on loans is the rate the bank charges to public for its loan. From one line of logic, we think of the ...
3
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2answers
127 views

Fractional reserve banking and bank insolvency

I am trying to understand the fractional reserve banking system (with say 10 % reserve ratio). If a bank becomes insolvent because 100 % of the loans of a bank go bust, then who really becomes liable ...
7
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1answer
20k views

How much money is wire transferred every year worldwide?

How much money is wire transferred every year worldwide? Estimates are fine.
3
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3answers
186 views

Does the current situation of excess reserve imply failure of QE?

Excess reserve @ Fed In the past it was assumed that excess reserves should be kept around 0 and banks should be lending to each other as much as they are borrowing. The central banks would correct ...
4
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1answer
185 views

Federal Reserve capital injections

What were the specific conditions that the Federal Reserve attached to the capital injections forced upon the major Wall St. banks during the Great Recession? How and why do they differ from normally ...
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0answers
30 views

Federal Reserve conditions [duplicate]

Does the Federal Reserve have conditions attached to the money that's created and distributed to major banks?
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1answer
30 views

Why monthly present in on line monthly payment calculator calculates as annual percent divided by 12?

Why monthly present in on line monthly payment calculator calculated as annual percent divided by 12? I think it's wrong, it should be exponential. For instance annual percent 4%. To calculate monthly ...
3
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1answer
279 views

How does the fractional reserve banking system work?

I would like to understand better exactly how this works. I have heard a lot recently (particularly since the 2007-08 crash and Occupy movement) about money creation in particular (usually with a very ...
3
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1answer
151 views

Bank rate and Repo rate

Please explain the difference between Bank rate and Repo rate. Do the Bank and Repo rates affect each other?
2
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1answer
355 views

How is monetary policy fair in the current economy? [closed]

I've just read Money Creation in the Modern Economy, an article published by the Bank of England. This article brings about a lot of questions in my mind. This article talks about money being created ...
3
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1answer
5k views

Difference between CCAR and ICAAP stress tests

What is the difference between ICAAP and CCAR? Except that one is for USA and other is for Canada?
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2answers
133 views

What do banks do with “Repaid Principal”?

When a bank receives payments towards repayment of the principal of a loan, it is called "Repaid Principal". What does a bank do with this amount? Does "Repaid Principal" add up to their pool of ...
3
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1answer
173 views

Why will these steps NOT fix the problems with LIBOR?

I am new to finance and recently came across the LIBOR scandal that happened some time in 2008. From my limited understanding of finance, it looks like a scandal that was obviously going to happen and ...
1
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1answer
181 views

How would banking in UK change if minimum required capital to open own bank would be £100k instead of €5m?

DIRECTIVE 2013/36/EU Article 12 Initial capital Without prejudice to other general conditions laid down in national law, the competent authorities shall refuse authorisation to ...
3
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0answers
89 views

Large banks collapsing verses a single countries economic decline [closed]

Please excuse anything i get wrong here i am in no way a economics expert but i am interested in the subject. Earlier today I saw someone make a post about how banks like CitiGroup have been given $...
0
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1answer
87 views

How would banking in EU change if taxpayers withdrew their support for Deposit Guarantee Scheme?

Disclaimer The question pertains mostly to EU but I believe counterparts to Deposits Guarantee Scheme exist world-wide. Assumption Let’s suppose that support for liberal ideas and free market rises ...
3
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1answer
58 views

Could the Troika's economic plan work for Greece?

There are a number of things that are confusing me about the current Greek financial crisis. The first is this. Is it plausible that if Greece did everything the Troika asked then the Greek ...
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1answer
79 views

Is the lack of information on customer behaviour good for banks?

Discussing chapter 18 on Microeconomic Theory Basic Principles and Extensions - Nicholson and Snyder book - regarding Asymmetric information a student raise an interesting point of view regarding the ...
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1answer
72 views

Do banks pay for deposit insurance?

Under deposit insurance, if my bank goes bankrupt, the government reimburses my deposit up to a specified maximum. Do banks pay for this insurance, and does it depend on their risk-taking? If not, ...
3
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2answers
641 views

How do we explain the difference in average leverage between banks and non-financial firms?

I've been reading a little about the capital structure of banks. For example, in this working paper, "Financing as a Supply Chain: The Capital Structure of Banks and Borrowers" by Gornall ...
2
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1answer
61 views

What will happen to the reserves at the Fed?

Banks currently have 2.7 trillion Federal Reserves that they hold at their Federal Reserve account. It's part of the monetary base and these reserves were created when the Fed purchased bonds in their ...
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3answers
188 views

If all Banks in the world are emptied..?

What would happen if every person in the world pulled their money out of their bank accounts?
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2answers
1k views

What is the necessity of the FDIC in the US banking system?

A bank's basic function is to "borrow short and lend long". In other words, it borrows money from depositors over the short term, promising to repay it on demand, while it lends most of that money out ...
3
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1answer
215 views

Understanding the impact of Subprime Mortgages crisis on investment banking

I'm interested to know the exact magnitude of impact of Subprime Mortgages crisis on major players in investment banking. In particular, how can I find data for percentage of revenue from Subprime ...
4
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2answers
132 views

If banks started simply depositing money with each other, then what else?

[Source:] If banks started simply depositing money with each other, all else aside, then what would happen? Keep in mind that the interest rate is basically the price of money. Supply-and-demand would ...
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1answer
6k views

What does it mean when a bank is “fully loaned up”?

Please briefly explain the situation when a bank is "fully loaned up".
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2answers
949 views

How can there be an electronic bank run?

I read that at 2008 there was an electronic bank run. From what I undestand bank runs occur due to the fractional reserve banking system. The actual real money you can hold on your hand are a ...
3
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4answers
334 views

What is the justification for it being a problem if loans are not paid back?

As far as I could understand, the loan system applied by banks which is based on a fractional reserve system works as follows: Assumptions: The bank has initially 1000$. The fractional reserve is ...
6
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3answers
3k views

How does inflation impact the welfare of the economy?

When the government causes inflation through printing money, the individuals who saved their money in the bank are poorer. Is there a way to determine how different inflation rates impact the welfare ...
9
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1answer
207 views

Banking Regulatory Frameworks, between the 1973 collapse of Bretton Woods and the introduction of the Basel Accords in 1988?

Does anyone know of any work on banking system behaviour, and in particular the governing regulatory frameworks that applied between the 1973 collapse of the gold standard based Bretton Woods system ...
9
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2answers
120 views

Are the figures quoted in this liblabcon's blog post accurate? (topic: UK banks)

Background With regards to the UK government. I have recently been involved in a debate stemming from figures mentioned in this blog post (the blogger was advocated by Occupy London's facebook page ...
7
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1answer
104 views

Banking System, Canada & US

Why are the way banks are established and spread out in Canada and US so different? Canada: There are only six major banks and most products offered are very competitive. Its almost unusual to hear ...
0
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1answer
311 views

What is the impact on the money supply of a reduction in the required reserve ratio? [closed]

In April 2011, the money supply was estimated to be 52 million hurls. At the same time, bank reserves were 6.24 million hurls and the reserve requirement was 12 percent. The banking industry, being “...
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2answers
302 views

Is there a theory of financial regulation?

I wonder whether there exists (even a young) theory of financial regulation in the sense of "how to regulate a financial institution/system in an optimal manner"? I mean, there is experience about ...

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