Title: Theory / Unimportant / Human / Economics / Banking - VSI
Tags: hasSeenConjDef examplesSwitchExample1

Name: Bank
Definition: accepts deposits from savers,
Page: 28
Chapter: 1
Section: origin
Definition2: extends loans to borrowers, and
Conjdef: an institution that
Definition3: provides a range of other financial services to its customers

Name: Shadow banking
Definition: financial institutions that offer similar services to banks, but operate without banking licenses and largely beyond the scope of regulation.
Page: 28
Chapter: 1
Section: origin

Question: How can a bank crash
Answer: If each depositor lose confidence and withdraw funds simultaneously
Page: 28
Chapter: 1
Section: origin

Question: history is
Answer: omitted
Page: 28
Chapter: 1
Section: origin

Name: Balance sheet
Definition: report on the financial structure and condition of a company, providing a realistic assessment of the value of the company’s assets and liabilities at the time of publication
Page: 44
Chapter: 1
Section: 2

Question: Why funds raised by the banks are considered as liabilities
Answer: because they impose an obligation on the bank to service the funds it has effectively borrowed
Page: 44
Chapter: 1
Section: 2
Answer2: They also impose an obligation on the bank to repay these funds at some point in the future

Question: When a depositor places funds in a personal or company bank account,
Answer: the bank borrow those funds from the depositor
Page: 44
Chapter: 1
Section: 2
Answer2: the bank incurs an obligation to provide various types of banking service and,
Example: in the case of savings accounts, pay interest on the funds deposited

Name: Subordinated debt
Definition: Bonds with the weakest protection in case of bank bankruptcy
Page: 44
Chapter: 1
Section: 2

Name: A bond
Definition: an object with a nominal value, and
Page: 44
Chapter: 1
Section: 2
Definition2: a commitment on the part of the emitter
Conjdef: Both
Definition3: to make regular payments to the investor over the lifetime of the bond, equivalent to interest payments on the nominal value and
Definition4: to repay the nominal value at a specified date of maturity.
Typ: Debt (for the emitter)

Smaller0: the total amount repaid for b
Greater0: the initial purchase price of b
Page: 44
Chapter: 1
Section: 2
Variables: b a bond
Smaller to greater: is greater than
Greater to smaller: is less than

Name: Reserve
Definition: deposits that are highly liquid and secure
Page: 44
Chapter: 1
Section: 2
Context: bank
Example: Holdings of cash

Name: Investor
Definition: Someone buying bonds or other securities issued by private-sector companies or the government
Page: 44
Chapter: 1
Section: 2
Context: bank

Name: Government bond
Definition: a security issued and sold by the government as a means to raise finance
Page: 44
Chapter: 1
Section: 2
Context: bank

Question: Why is there little risk in Government bond ?
Answer: Because government can create money to pay it, if required
Page: 44
Chapter: 1
Section: 2
Context: bank

Name: coupon payments of b
Definition: Regular payement given to the bond's owner
Page: 44
Chapter: 1
Section: 2
Variables: b a bond
Context: bank
Name2: stream of interest of b

Name: Nominal value of b
Definition: How much the owner of b will receive when the bond is mature
Page: 44
Chapter: 1
Section: 2
Variables: b a bond
Context: bank

Name: The bank's capital
Definition: buffer in case of unanticiped losses
Page: 46
Chapter: 1
Section: 2
Context: bank
Definition2: a source of funding for the bank
Conjdef: The difference between a bank’s total assets, and its liabilities. Its role are
Name2: equity
Name3: net worth

Smaller0: the value of the assets
Greater0: the value of the liabilities
Page: 46
Chapter: 1
Section: 2
Smaller to greater: must be greater than
Greater to smaller: must be smaller than
Context: bank

Question: Capital can come from
Answer: original shareholders’ financial investment in setting up the bank, or
Page: 46
Chapter: 1
Section: 2
Answer2: from past profits that have been retained

Name: Monetary financial institutions
Definition: institutions licensed to accept deposits
Page: 46
Chapter: 1
Section: 2
Example: branches of banks domiciled elsewhere in the European Economic Area
Abbreviation: MFI
Counterexample: credit unions, friendly societies, and insurance companies.

Question: How do banks earn profits
Answer: charging borrowers higher rates of interest than they pay depositors and other suppliers of funds
Page: 50
Chapter: 1
Section: 2
Answer2: charging fees for a range of other financial services.

Name: c's income statement
Definition: the main components of income generated and costs incurred by the company over a specific period, and
Page: 50
Chapter: 1
Section: 2
Variables: c a company
Definition2: the profit (or loss) accruing to the company’s shareholders.
Conjdef: A document reporting

Name: A loss, in a report
Page: 50
Chapter: 1
Section: 2
Variables: c a company
Denoted by: (number in parenthesis)

Name: Return on assets
Definition: profit (or loss) expressed as a percentage of total assets
Page: 50
Chapter: 1
Section: 2
Variables: c a company
Abbreviation: ROA

Name: Return on equity
Definition: profit (or loss) expressed as a percentage of capital or equity
Page: 50
Chapter: 1
Section: 2
Variables: c a company
Abbreviation: ROE

Name: Net interest margin
Definition: the difference between the average interest rate charged by the bank on its loans to borrowers, and the average interest rate paid by the bank to its depositors and other lenders.
Page: 50
Chapter: 1
Section: 2
Variables: c a company
Abbreviation: NIM