Questions tagged [banking]

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

Filter by
Sorted by
Tagged with
1
vote
0answers
26 views

What qualifications does a bank need to create USD funds?

It is my understanding that, while any entity can create dollar-denominated assets (stocks and bonds) and sell them on the open market, only banking institutions in the United States can engage in ...
0
votes
2answers
85 views

Bank Capital and Profit

I am struggling a bit with understanding the meaning of capital ratios, and bank profitablity. It seems to me that capital requirements stipulate that a certain fraction of banks' risk weighted assets ...
1
vote
0answers
14 views

What were the liquidity requirements prior to Basel III?

I am investigating the impact of enforcing the Basel III liquidity requirements with a focus on the LCR. I have found some information about regulations in fore prior to Basel III in Sweden and ...
1
vote
1answer
23 views

Where does bank’s Tier1 capital lie [closed]

Banks need to maintain certain minimum capital as per Basel norms but where does this money lie. If it lies in a bank account, what would happen if that bank goes bankrupt? Say, SBI keeps its Tier1 ...
0
votes
1answer
78 views

Bank maturity mismach

So my question is about maturity mismatch and what is the appropriate method to calculate it. I have seen some simplified examples in academic books but, when I tried to approach it in a holdings bank,...
0
votes
1answer
168 views

Open market purchase of securities and it's effect on balancesheet

An open market purchase of securities lead to increase in bank reserves ( Liability side) and increase in assets(asset side) of central bank balance sheet. My doubt is why it leads to increase in ...
1
vote
1answer
22 views

Effect of the Bank Home Loans of Property Prices

my name is Nick and I'm from Sydney, Australia. In the last 5 years, our big cities such as Sydney and Melbourne has experienced rapid property price growth, they went so high and so fast that Sydney ...
2
votes
3answers
98 views

Could a bank simply eliminate a loan from its books?

Assume a bank gives a loan to Mr X. for, say 100. The bank's assets (account "loans") increases by 100, and its liability (account "deposits") also go up by 100 (which is the extra 100 added to the ...
2
votes
1answer
85 views

Do institutions buy debt with credit?

I am reading Money Power book, from 1932 (http://www.worldcat.org/title/money-power-and-human-life/oclc/3783026). The author explains how the War Loans in the UK worked. He says that the government ...
0
votes
0answers
23 views

What would be the possible effect on a country's economy if private banks are declared as non-profit?

Suppose, there are 100 banks in a country. 50 of them are government owned. What would be the possible effect on a country's economy if private banks are declared as non-profit? I.e. they can not ...
0
votes
1answer
312 views

Difference between Unit Banking and Direct Banking

As the title says, I want to understand the differences between Unit Banking Systems and Direct Banking Systems. Here are the few questions that'll help me understand: Direct banks provide remote ...
2
votes
1answer
210 views

Do banks make profits by selling bonds to the central bank?

I am a bit puzzled by the quote below, from here (emphasis mine): Modern monetary theorists have helped clarify the obvious point that private banks are not essential to the design of the system. ...
3
votes
2answers
110 views

How does lending money contribute to society?

I essentially asked this question here, but IMO didn't get an answer from anyone who knew what they were talking about. Normally someone gets paid because they work in a job, i.e. they contribute to ...
2
votes
1answer
53 views

World Bank lending categories

I need to do data visualization of World Bank lending category for some countries using source from their page. When I was going through it I found some inconsistencies in categories they use to ...
0
votes
1answer
301 views

Would this alternative to fractional reserve banking work?

While reading the answer to Implications of abolishing Fractional Reserve Banking on mortgages and interest rates, I started to wonder if there wasn't a simple solution to the problems that would ...
1
vote
1answer
23 views

What aspects of macroeconomics should I address for convincing an investor to invest in a certain country? [closed]

I have a task at my internship which is to write 2 pages about the economic conditions in my country. My question is what I could include in my research. Surely, I'll address inflation, currency ...
1
vote
2answers
53 views

Why a bank never combine all benefits/promotions and issue a single Credit Card

Bank today issues multiple type of Credit Cards with different promotions linked to them. Any reason stopping a bank from issuing a single card with combined benefits/promotions, wouldn't that be more ...
0
votes
1answer
377 views

Isn't the liquidity trap about real interest rates?

Here is a so-called thought experiment. Suppose the inflation rate is negative, the nominal interest rate slightly negative, and the real interest rate positive (call it $r$). I think people would ...
3
votes
3answers
137 views

Where is there more money: Bank Accounts or Brokerage Accounts?

There is a significant amount of money in the stock market in US companies. For example, look at the largest US company by market cap - Apple. It is currently worth over 800 billion US dollars. I've ...
2
votes
1answer
73 views

Do banks really have people on the boards of corporations, and why?

I read somewhere that in the United States, there are often people from banks on the boards of executives of corporations. Note, I don't mean ex-bankers who now work for that corporation, I mean ...
0
votes
1answer
198 views

Do credit cards create more printed money

As far as I know, when people take a loan from a bank, most of the loan value is electronically printed money, i.e. money that did not exist before. Is it also what happens with consumer credit cards? ...
1
vote
2answers
828 views

Do privately owned banks ever indefinitely lend money to their owners?

By privately owned bank, I mean specifically a bank that is not registered as a corporation with publicly tradable shares. Does it ever happen that such banks create money by lending it to their own ...
2
votes
3answers
250 views

What Happened in 2008?

Some say "housing crash" but I suspect the existing global banking system imploded. Am I off-base, or ...? In my experience, CME S&P futures, for example, require a performance bond of something ...
0
votes
5answers
136 views

What is a dollar, currently?

What is the definition of a dollar now without gold backing? It seems that a dollar is now just an entry in a book somewhere in some bank. Or it is the federal reserve note? Or is it both? I ...
4
votes
1answer
213 views

Why did the stock of consumer loans held by commercial banks jump in March 2010?

The graph below refers to "Consumer Loans: Credit Cards and Other Revolving Plans, All Commercial Banks", from here. What happened in March 2010? The data come from the balance sheets of commercial ...
3
votes
2answers
77 views

VaR and rating for commercial banks

I would like to know if there exist a database where Value at risk of commercial banks are. Beyond that if there is a connection between the rating from agency (as S&P, Fitch etc..) and the VaR ...
0
votes
1answer
263 views

Are there countries with free banking?

Are there any countries in which banks do not need to follow any special regulation other than the regular business regulations. If not, are there any countries that come close? For more information ...
1
vote
1answer
41 views

In a bank-based economy, how do banks determine how to split the economic pie with the businesses?

In an economy with a bank-based financial system (little or no stock market activity allowed), I think I've got this much down: The banks lend to businesses, who then make products and services. The ...
2
votes
1answer
58 views

Is Ireland setting itself up for a debt crisis?

I'm just curious about some things I read in a banking report. It says more than 20% total bank loans in Ireland are Non-performing loans which are likely to default. "With the NPL ratio for ...
1
vote
1answer
71 views

Given fractional banking and the multiplier effect, for every dollar in circulation, how many dollars in spendable money exist?

The fractional banking system, in a nutshell, allows banks to invest the money deposited in them, and then for whoever ends up with that invested money to deposit the money back into the bank, which ...
0
votes
0answers
53 views

Does only enough money exist to pay the principal on all debts, and none for the interest or for anything else?

This is reported to be the testimony of Marriner Eccles, Governor of the Federal Reserve Board, before the House Committee on Banking and Currency, on September 30, 1941. Does this mean that only ...
-1
votes
1answer
45 views

How is short-term borrowing by banks in the US performed?

I read a statement that one reason for persistent demand for US Treasuries is that US banks buy them because they can be used as collateral for acquiring short-term debt. I don't understand this. If ...
4
votes
2answers
281 views

How does the central bank changing interest rates change interest rates in the commerical banking sector?

I understand that the federal reserve manipulates the federal fund rate in order to change interest rates in the wider banking sector. What I am struggling to understand is how the changing the ...
2
votes
1answer
387 views

If banks create money by lending it out, how are they taking any risk?

When I lend money to someone and they don't pay it back, I lose my money. I can only lend out money that I own (or borrow). I understand that when a bank lends money, that money is created the ...
1
vote
1answer
30 views

What guarantees that for every credit there is a debit in an electronic fund transfer?

I'm worried about the difference between seeming honest and actually being honest. I know banks rely in part on a good reputation to stay in business. But it seems to me that as long as a bank has a ...
1
vote
1answer
69 views

Is there collaboration between cyber criminals and banks?

In disease evolution, one often finds that bacteria and viruses evolve to co-exist with their hosts and become less malevolent. Making an analogy between cybercrime and disease, I am wondering if ...
2
votes
0answers
21 views

Where does the value of implicit government banking guarantees end up?

Post-Lehman a widespread political agenda has established to minimize implicit government guarantees to banks. However, in the buid-up of new banking regulations, lending to small and mid-sized ...
1
vote
0answers
34 views

Explaining the size of the canadian banking sector

Canadian banks are among the largest in the world and I think that only the UK compares in terms of having your economy dominated by banking. Of course some of the US banks are much larger but so is ...
4
votes
5answers
618 views

Could massive derivatives exposures at banks lead to disaster?

A while back I posted this question about the possible risks of banks having massive derivatives exposures. The most upvoted answer (by BKay) said that there was little risk because banks mainly hold ...
1
vote
0answers
32 views

How does the private bank reserve increase when money is being withdrew?

The federal government raises 400 million by selling bonds to the general public in order to pay for a construction program. The program cost 440 million so the government withdraws 25 million from ...
0
votes
1answer
25 views

Basel affecting the bank behaviour?

In EU, Banks have changed their behaviour lately, e.g. as acting liquidity providers to certain markets like notes etc. Introduction of Basel III is probably one reason (tighter capital and ...
0
votes
1answer
563 views

Solvency and liquidity. How to understand them? Should Central Banks only lend to solvent but illiquid banks?

Solvency: Long-term liabilities are covered by assets(with value measured at maturity, not at market-to-market) Liquidity: short-term liabilities are covered by assets which can be sold in the short-...
1
vote
0answers
48 views

Do you have a list of books about the evolution of the banking sector?

I'm looking for interesting books to read about the banking sector. Topics: Changes in the banking sector, Adaptation of financial services in the digital age, European and US banking regulations ...
6
votes
2answers
121 views

How will London's role as a financial center be affected after the Brexit and what are possible alternatives?

I looked around on this site and couldn't find anything close to what I'm asking on Economics SE, so I hope it is the right place to ask. I am interested in but have no background in economy, so all ...
0
votes
1answer
39 views

If central banks become shareholders, where can investors go?

The ECB is buying corporate bonds. It could eventually also buy shares. What would be left for investors to invest in? Letting bank shareholders pay for bailouts resulted in crashes of their shares. ...
3
votes
3answers
163 views

what percentage of a banks money do they lend

Say a bank has 1 billion dollars deposited by individuals with bank accounts. How much of this does the banks lend/invest? Obviously it can't lend all of it or when I go to the bank there would be no ...
4
votes
1answer
2k views

How often do banks borrow from the Federal Reserve?

Though I've seen plenty of articles talk about in what circumstances banks borrow from the Fed, I haven't seen any quantification on that note. On average, what percent of the money that banks lend ...
4
votes
1answer
797 views

List of commercial banks by country in Europe

How do I find a list of all operating commercial banks by country? I am only interested in commercial banks. Not building societies nor community banks. I expected that that list should be made ...
7
votes
4answers
8k views

What institutions are examples of “shadow banking”?

I often hear the term shadow banking tossed around when discussing the United States and Chinese economies. What exactly is shadow banking and could you give examples of some specific companies that ...
2
votes
0answers
159 views

Bail-in and equity absorbing losses

Below we have a diagram for a bail-in. According to it, as the big company/bank takes a loss in the asset side, the first to absorb those losses, in the liabilities side, is equity. How is this ...