| Preface |
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xxix | |
| About the Authors |
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xxxix | |
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1 | (38) |
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Why Study Financial Markets and Institutions? |
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3 | (14) |
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3 | (1) |
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Why Study Financial Markets? |
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3 | (4) |
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Debt Markets and Interest Rates |
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4 | (1) |
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5 | (1) |
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The Foreign Exchange Market |
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6 | (1) |
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Why Study Financial Institutions? |
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7 | (2) |
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Central Banks and the Conduct of Monetary Policy |
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8 | (1) |
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Structure of the Financial System |
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8 | (1) |
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Banks and Other Financial Institutions |
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8 | (1) |
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9 | (1) |
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Managing Risk in Financial Institutions |
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9 | (1) |
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Applied Managerial Perspective |
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9 | (1) |
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How We Will Study Financial Markets and Institutions |
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10 | (3) |
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11 | (1) |
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11 | (2) |
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13 | (1) |
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14 | (1) |
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14 | (1) |
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14 | (1) |
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15 | (2) |
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Overview of the Financial System |
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17 | (22) |
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17 | (1) |
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Function of Financial Markets |
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18 | (2) |
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Structure of Financial Markets |
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20 | (2) |
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20 | (1) |
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Primary and Secondary Markets |
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20 | (1) |
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Exchanges and Over-the-Counter Markets |
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21 | (1) |
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Money and Capital Markets |
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22 | (1) |
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Internationalization of Financial Markets |
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22 | (1) |
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International Bond Market, Eurobonds, and Eurocurrencies |
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22 | (1) |
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23 | (1) |
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Function of Financial Intermediaries |
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23 | (1) |
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The Wall Street Journal: Following the News Foreign Stock Market Indexes |
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24 | (1) |
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Global The Importance of Financial Intermediaries to Securities Markets: An International Comparison |
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25 | (3) |
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25 | (1) |
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26 | (1) |
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Asymmetric Information: Adverse Selection and Moral Hazard |
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26 | (2) |
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28 | (4) |
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29 | (1) |
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Contractual Savings Institutions |
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30 | (1) |
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Investment Intermediaries |
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31 | (1) |
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Regulation of the Financial System |
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32 | (3) |
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Increasing Information Available to Investors |
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32 | (1) |
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Ensuring the Soundness of Financial Intermediaries |
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33 | (2) |
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Improving Control of Monetary Policy |
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35 | (1) |
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Financial Regulation Abroad |
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35 | (1) |
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35 | (1) |
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36 | (1) |
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36 | (1) |
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Web Exercises: Overview of the Financial System |
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37 | (2) |
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PART TWO FUNDAMENTALS OF FINANCIAL MARKETS |
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39 | (110) |
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What Do Interest Rates Mean and What Is Their Role in Valuation? |
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41 | (30) |
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41 | (1) |
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42 | (10) |
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42 | (2) |
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Four Types of Credit Market Instruments |
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44 | (1) |
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45 | (7) |
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Global Negative T-Bill Rates? Japan Shows the Way |
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52 | (1) |
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The Distinction Between Real and Nominal Interest Rates |
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52 | (3) |
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The Distinction Between Interest Rates and Returns |
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55 | (1) |
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Mini-Case With TIPS, Real Interest Rates Have Become Observable in the United States |
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56 | (3) |
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Maturity and the Volatility of Bond Returns: Interest-Rate Risk |
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59 | (1) |
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Mini-Case Helping Investors Select Desired Interest-Rate Risk |
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59 | (2) |
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60 | (1) |
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60 | (1) |
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The Practicing Manager Calculating Duration to Measure Interest-Rate Risk |
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61 | (7) |
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68 | (1) |
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68 | (1) |
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68 | (1) |
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69 | (1) |
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Web Exercises: Understanding Interest Rates |
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70 | (1) |
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Why Do Interest Rates Change? |
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71 | (30) |
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71 | (1) |
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Determinants of Asset Demand |
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71 | (4) |
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72 | (1) |
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72 | (1) |
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73 | (2) |
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75 | (1) |
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75 | (1) |
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Supply and Demand in the Bond Market |
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75 | (6) |
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76 | (2) |
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78 | (1) |
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78 | (1) |
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Supply and Demand Analysis |
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79 | (1) |
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79 | (2) |
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Changes in Equilibrium Interest Rates |
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81 | (6) |
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Shifts in the Demand for Bonds |
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81 | (4) |
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Shifts in the Supply of Bonds |
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85 | (2) |
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Case Changes in the Equilibrium Interest Rate Due to Expected Inflation or Business Cycle Expansions |
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87 | (4) |
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Case Explaining Low Japanese Interest Rates |
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91 | (1) |
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Case: The Wall Street Journal The ``Credit Markets'' Column |
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92 | (1) |
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The Wall Street Journal: Following the News The ``Credit Markets'' Column |
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93 | (1) |
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The Practicing Manager Profiting from Interest-Rate Forecasts |
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94 | (1) |
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The Wall Street Journal: Following the News Forecasting Interest Rates |
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95 | (1) |
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96 | (1) |
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97 | (1) |
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97 | (1) |
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98 | (1) |
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Web Exercises: The Behavior of Interest Rates |
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99 | |
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Appendix 1: Models of Asset Pricing |
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13 | (10) |
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Appendix 2: Applying the Asset Market Approach to a Commodity Market: The Case of Gold |
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23 | (4) |
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Appendix 3: Supply and Demand in the Market for Money: The Liquidity Preference Framework |
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27 | (74) |
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How Do Risk and Term Structure Affect Interest Rates? |
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101 | (30) |
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101 | (1) |
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Risk Structure of Interest Rates |
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101 | (4) |
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102 | (3) |
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Case The Enron Bankruptcy and the Baa-Aaa Spread |
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105 | (1) |
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Case What If Treasury Securities Were No Longer Default-Free? |
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106 | (4) |
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106 | (1) |
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Income Tax Considerations |
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107 | (2) |
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109 | (1) |
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Case Effects of the Bush Tax Cut on Bond Interest Rates |
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110 | (1) |
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Term Structure of Interest Rates |
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110 | (1) |
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The Wall Street Journal: Following the News Yield Curves |
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111 | (11) |
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111 | (5) |
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Market Segmentation Theory |
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116 | (1) |
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117 | (3) |
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Evidence on the Term Structure |
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120 | (1) |
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121 | (1) |
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Case Interpreting Yield Curves, 1980--2004 |
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122 | (1) |
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The Practicing Manager Using the Term Structure to Forecast Interest Rates |
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123 | (3) |
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126 | (1) |
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127 | (1) |
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127 | (1) |
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128 | (1) |
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Web Exercises: The Risk and Term Structure of Interest Rates |
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129 | (2) |
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Are Financial Markets Efficient? |
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131 | (18) |
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131 | (1) |
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The Efficient Market Hypothesis |
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132 | (3) |
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Rationale Behind the Hypothesis |
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134 | (1) |
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Stronger Version of the Efficient Market Hypothesis |
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135 | (1) |
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Evidence on the Efficient Market Hypothesis |
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135 | (2) |
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Evidence in Favor of Market Efficiency |
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135 | (2) |
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Mini-Case An Exception That Proves the Rule: Ivan Boesky |
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137 | (2) |
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Case Should Foreign Exchange Rates Follow a Random Walk? |
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139 | (3) |
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Evidence Against Market Efficiency |
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139 | (2) |
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Overview of the Evidence on the Efficient Market Hypothesis |
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141 | (1) |
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The Practicing Manager Practical Guide to Investing in the Stock Market |
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142 | (1) |
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Mini-Case Should You Hire an Ape as Your Investment Adviser? |
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142 | (3) |
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Case What Do the Black Monday Crash of 1987 and the Tech Crash of 2000 Tell Us About the Efficient Market Hypothesis? |
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145 | (1) |
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146 | (1) |
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147 | (1) |
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147 | (1) |
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147 | (1) |
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148 | (1) |
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Web Exercises: The Efficient Market Hypothesis |
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148 | (1) |
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PART THREE CENTRAL BANKING AND THE CONDUCT OF MONETARY POLICY |
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149 | (68) |
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Structure of Central Banks and the Federal Reserve System |
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151 | (24) |
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151 | (1) |
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Origins of the Federal Reserve System |
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151 | (1) |
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Inside the Fed The Political Genius of the Founders of the Federal Reserve System |
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152 | (1) |
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Formal Structure of the Federal Reserve System |
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153 | (2) |
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154 | (1) |
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Inside the Fed Special Role of the Federal Reserve Bank of New York |
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155 | (3) |
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156 | (1) |
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Board of Governors of the Federal Reserve System |
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157 | (1) |
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Inside the Fed Role of the Research Staff |
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158 | (2) |
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Federal Open Market Committee (FOMC) |
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158 | (1) |
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159 | (1) |
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Inside the Fed Green, Blue, and Beige: What Do These Colors Mean at the Fed? |
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160 | (1) |
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Informal Structure of the Federal Reserve System |
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161 | (1) |
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Inside the Fed Role of Member Banks in the Federal Reserve System |
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162 | (1) |
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How Independent Is the Fed? |
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163 | (2) |
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Structure and Independence of Foreign Central Banks |
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165 | (3) |
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165 | (1) |
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166 | (1) |
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166 | (1) |
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167 | (1) |
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The Trend Toward Greater Independence |
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167 | (1) |
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Explaining Central Bank Behavior |
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168 | (1) |
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Inside the Fed Federal Reserve Transparency |
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168 | (1) |
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Should the Fed Be Independent? |
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169 | (2) |
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The Case for Independence |
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169 | (1) |
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The Case Against Independence |
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170 | (1) |
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Central Bank Independence and Macroeconomic Performance Throughout the World |
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171 | (1) |
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172 | (1) |
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172 | (1) |
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172 | (1) |
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Web Exercises: Structure of Central Banks and the Federal Reserve System |
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173 | (2) |
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Conduct of Monetary Policy: Tools, Goals, and Targets |
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175 | (42) |
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175 | (1) |
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The Federal Reserve's Balance Sheet |
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175 | (4) |
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175 | (2) |
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177 | (1) |
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177 | (1) |
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178 | (1) |
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The Market for Reserves and the Federal Funds Rate |
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179 | (4) |
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Supply and Demand in the Market for Reserves |
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179 | (1) |
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How Changes in the Tools of Monetary Policy Affect the Federal Funds Rate |
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180 | (3) |
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183 | (6) |
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183 | (1) |
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A Day at the Trading Desk |
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184 | (1) |
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185 | (1) |
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Operation of the Discount Window |
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185 | (2) |
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187 | (1) |
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188 | (1) |
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Advantages of Open Market Operations Over the Other Tools |
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188 | (1) |
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Inside the Fed Discounting to Prevent a Financial Panic: The Black Monday Stock Market Crash of October 1987 and the Terrorist Destruction of the World Trade Center in September 2001 |
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189 | (1) |
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190 | (2) |
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190 | (1) |
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191 | (1) |
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191 | (1) |
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Global The Growing European Commitment to Price Stability |
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192 | (1) |
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192 | (1) |
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Stability of Financial Markets |
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192 | (1) |
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Stability in Foreign Exchange Markets |
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193 | (1) |
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193 | (1) |
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Central Bank Strategy: Use of Targets |
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193 | (2) |
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195 | (3) |
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Criteria for Choosing Intermediate Targets |
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197 | (1) |
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Criteria for Choosing Operating Targets |
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198 | (1) |
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Fed Policy Procedures: Historical Perspective |
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198 | (3) |
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The Early Years: Discount Policy as the Primary Tool |
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199 | (1) |
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Discovery of Open Market Operations |
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199 | (1) |
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200 | (1) |
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War Finance and the Pegging of Interest Rates: 1942--1951 |
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200 | (1) |
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Inside the Fed Bank Panics of 1930--1933: Why Did the Fed Let Them Happen? |
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201 | (4) |
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Targeting Monetary Market Conditions: The 1950s and 1960s |
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201 | (1) |
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Targeting Monetary Aggregates: The 1970s |
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201 | (2) |
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New Fed Operating Procedures: October 1979--October 1982 |
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203 | (1) |
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Deemphasis of Monetary Aggregates: October 1982--Early 1990s |
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204 | (1) |
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Federal Funds Targeting Again: Early 1990s and Beyond |
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204 | (1) |
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International Considerations |
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205 | (1) |
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Global International Policy Coordination: The Plaza Agreement and the Louvre Accord |
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206 | (1) |
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Monetary Targeting in Other Countries |
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206 | (3) |
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207 | (1) |
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207 | (1) |
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208 | (1) |
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208 | (1) |
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Lessons from Monetary Targeting Experiences |
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209 | (1) |
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The New International Trend in Monetary Policy Strategy: Inflation Targeting |
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209 | (3) |
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210 | (1) |
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210 | (1) |
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211 | (1) |
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Lessons from Inflation Targeting Experience |
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211 | (1) |
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The Practicing Manager Using a Fed Watcher |
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212 | (1) |
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213 | (1) |
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214 | (1) |
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214 | (1) |
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215 | (1) |
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Web Exercises: Conduct of Monetary Policy: Tools, Goals, and Targets |
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215 | |
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Appendix: The Fed's Balance Sheet and the Monetary Base |
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39 | (178) |
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PART FOUR FINANCIAL MARKETS |
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217 | (152) |
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219 | (26) |
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219 | (1) |
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The Money Markets Defined |
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219 | (1) |
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Why Do We Need the Money Markets? |
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220 | (1) |
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Money Market Cost Advantages |
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221 | (1) |
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The Purpose of the Money Markets |
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221 | (1) |
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Who Participates in the Money Markets? |
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222 | (3) |
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223 | (1) |
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223 | (1) |
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224 | (1) |
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224 | (1) |
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Investment and Securities Firms |
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224 | (1) |
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225 | (1) |
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225 | (1) |
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225 | (1) |
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Case Discounting the Price of Treasury Securities to Pay the Interest |
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226 | (2) |
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Mini-Case Treasury Bill Auctions Go Haywire |
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228 | (9) |
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229 | (1) |
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230 | (1) |
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Negotiable Certificates of Deposit |
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231 | (1) |
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232 | (3) |
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235 | (2) |
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237 | (1) |
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Global Ironic Birth of the Eurodollar Market |
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237 | (1) |
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Comparing Money Market Securities |
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238 | (2) |
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238 | (1) |
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239 | (1) |
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How Money Market Securities Are Valued |
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239 | (1) |
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The Wall Street Journal: Following The News Money Market Rates |
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240 | (1) |
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241 | (1) |
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242 | (1) |
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242 | (1) |
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242 | (1) |
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Web Exercises: The Money Markets |
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243 | (2) |
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245 | (28) |
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245 | (1) |
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Purpose of the Capital Market |
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245 | (1) |
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Capital Market Participants |
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246 | (1) |
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246 | (1) |
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247 | (1) |
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247 | (4) |
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Treasury Bond Interest Rates |
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248 | (1) |
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Treasury Inflation-Indexed Securities |
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248 | (2) |
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250 | (1) |
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250 | (1) |
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251 | (1) |
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Risk in the Municipal Bond Market |
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252 | (1) |
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252 | (6) |
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Characteristics of Corporate Bonds |
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253 | (2) |
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255 | (3) |
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Financial Guarantees for Bonds |
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258 | (1) |
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258 | (3) |
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258 | (2) |
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Yield on a Discount Basis |
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260 | (1) |
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Case: The Wall Street Journal The Bond Page |
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261 | (1) |
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The Wall Street Journal: Following the News Treasury Bonds and Notes |
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262 | (1) |
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The Wall Street Journal: Following the News Treasury Bills |
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263 | (1) |
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The Wall Street Journal: Following the News Corporate Bonds |
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264 | (1) |
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Finding the Value of Coupon Bonds |
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265 | (3) |
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Finding the Price of Semiannual Bonds |
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265 | (3) |
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268 | (1) |
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269 | (1) |
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269 | (1) |
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269 | (1) |
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270 | (1) |
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Web Exercise: The Bond Market |
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271 | (2) |
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273 | (22) |
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273 | (1) |
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273 | (2) |
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Common Stock Versus Preferred Stock |
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274 | (1) |
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275 | (1) |
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Mini-Case The Most Expensive Seat in Town |
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275 | (3) |
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Computing the Price of Common Stock |
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278 | (1) |
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Mini-Case Nasdaq: Fighting for Its Life Against ECNs |
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279 | (1) |
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The One-Period Valuation Model |
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279 | (1) |
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The Wall Street Journal: Following the News Stock Prices |
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280 | (4) |
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The Generalized Dividend Valuation Model |
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281 | (1) |
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281 | (2) |
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Price Earnings Valuation Method |
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283 | (1) |
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How the Market Sets Security Prices |
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284 | (1) |
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285 | (2) |
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Problems with Estimating Growth |
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285 | (1) |
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Problems with Estimating Risk |
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286 | (1) |
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Problems with Forecasting Dividends |
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286 | (1) |
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Case The September 11 Terrorist Attack, the Enron Scandal, and the Stock Market |
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287 | (1) |
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287 | (1) |
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Mini-Case History of the Dow Jones Industrial Average |
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288 | (1) |
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288 | (2) |
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Regulation of the Stock Market |
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290 | (1) |
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The Securities and Exchange Commission |
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290 | (1) |
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291 | (1) |
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292 | (1) |
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292 | (1) |
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292 | (1) |
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Web Exercises: The Stock Market |
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293 | (2) |
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295 | (22) |
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295 | (1) |
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296 | (1) |
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Characteristics of the Residential Mortgage |
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297 | (1) |
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297 | (1) |
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Case The Discount Point Decision |
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298 | (3) |
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299 | (2) |
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Mortgage Loan Amortization |
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301 | (1) |
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Case Computing the Payment on Mortgage Loans |
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301 | (2) |
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303 | (3) |
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Insured and Conventional Mortgages |
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303 | (1) |
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Fixed- and Adjustable-Rate Mortgages |
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304 | (1) |
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304 | (2) |
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Mortgage-Lending Institutions |
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306 | (1) |
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307 | (1) |
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E-Finance Borrowers Shop the Web for Mortgages |
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308 | (1) |
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Secondary Mortgage Market |
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308 | (1) |
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Securitization of Mortgages |
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309 | (1) |
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What Is a Mortgage-Backed Security? |
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309 | (1) |
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Mini-Case Are Fannie Mae and Freddie Mac Getting Too Big for Their Britches? |
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310 | (2) |
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Types of Pass-Through Securities |
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310 | (2) |
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Mortgage-Backed Securities Clearing Corporation |
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312 | (1) |
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The Impact of Securitized Mortgages on the Mortgage Market |
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312 | (1) |
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313 | (1) |
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313 | (1) |
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314 | (1) |
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314 | (2) |
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Web Exercises: The Mortgage Markets |
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316 | (1) |
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The Foreign Exchange Market |
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317 | (30) |
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317 | (1) |
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318 | (2) |
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What Are Foreign Exchange Rates? |
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319 | (1) |
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Why Are Exchange Rates Important? |
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319 | (1) |
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The Wall Street Journal: Following the News Foreign Exchange Rates |
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320 | (1) |
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How Is Foreign Exchange Traded? |
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321 | (1) |
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Exchange Rates in the Long Run |
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321 | (4) |
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321 | (1) |
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Theory of Purchasing Power Parity |
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322 | (1) |
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Why the Theory of Purchasing Power Parity Cannot Fully Explain Exchange Rates |
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323 | (1) |
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Factors That Affect Exchange Rates in the Long Run |
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323 | (2) |
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Exchange Rates in the Short Run |
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325 | (6) |
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Comparing Expected Returns on Domestic and Foreign Deposits |
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326 | (2) |
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Interest Parity Condition |
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328 | (1) |
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Equilibrium in the Foreign Exchange Market |
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329 | (2) |
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Explaining Changes in Exchange Rates |
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331 | (3) |
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Shifts in the Expected-Return Schedule for Foreign Deposits |
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331 | (2) |
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Shifts in the Expected-Return Schedule for Domestic Deposits |
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333 | (1) |
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Case Changes in the Equilibrium Exchange Rate: Two Examples |
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334 | (4) |
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Changes in the Money Supply |
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336 | (1) |
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Exchange Rate Overshooting |
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337 | (1) |
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Case Why Are Exchange Rates So Volatile? |
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338 | (1) |
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Case Explaining the Rise and Fall of the Dollar in the 1980s |
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339 | (2) |
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Case The Euro's First Six Years |
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341 | (1) |
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Case: The Wall Street Journal The ``Currency Trading'' Column |
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341 | (1) |
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The Practicing Manager Profiting from Foreign Exchange Forecasts |
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342 | (1) |
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The Wall Street Journal: Following the News The ``Currency Trading'' Column |
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343 | (1) |
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344 | (1) |
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344 | (1) |
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344 | (1) |
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345 | (1) |
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Web Exercises: The Foreign Exchange Market |
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346 | (1) |
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The International Financial System |
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347 | (22) |
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347 | (1) |
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Intervention in the Foreign Exchange Market |
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347 | (1) |
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Foreign Exchange Intervention and the Money Supply |
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347 | (1) |
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Inside the Fed A Day at the Federal Reserve Bank of New York's Foreign Exchange Desk |
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348 | (4) |
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Unsterilized Intervention |
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350 | (1) |
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351 | (1) |
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352 | (1) |
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Exchange Rate Regimes in the International Financial System |
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353 | (1) |
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Fixed Exchange Rate Regimes |
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353 | (1) |
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Global The Euro's Challenge to the Dollar |
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354 | (2) |
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Case The Foreign Exchange Crisis of September 1992 |
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356 | (1) |
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Global Argentina's Currency Board |
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357 | (1) |
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358 | (1) |
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The Practicing Manager Profiting from a Foreign Exchange Crisis |
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359 | (1) |
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Case Recent Foreign Exchange Crises in Emerging Market Countries: Mexico 1994, East Asia 1997, Brazil 1999, and Argentina 2002 |
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360 | (2) |
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361 | (1) |
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362 | (1) |
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Controls on Capital Outflows |
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362 | (1) |
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Controls on Capital Inflows |
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363 | (1) |
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363 | (3) |
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Should the IMF Be an International Lender of Last Resort? |
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364 | (2) |
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366 | (1) |
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367 | (1) |
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367 | (1) |
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368 | (1) |
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Web Exercises: The International Financial System |
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368 | |
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Appendix: Balance of Payments |
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45 | (324) |
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PART FIVE FUNDAMENTALS OF FINANCIAL INSTITUTIONS |
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369 | (54) |
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Why Do Financial Institutions Exist? |
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371 | (32) |
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371 | (1) |
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Basic Facts About Financial Structure Throughout the World |
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371 | (4) |
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375 | (1) |
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How Transaction Costs Influence Financial Structure |
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375 | (1) |
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How Financial Intermediaries Reduce Transaction Costs |
|
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375 | (1) |
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Asymmetric Information: Adverse Selection and Moral Hazard |
|
|
376 | (1) |
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The Lemons Problem: How Adverse Selection Influences Financial Structure |
|
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377 | (3) |
|
Lemons in the Stock and Bond Markets |
|
|
378 | (1) |
|
Tools to Help Solve Adverse Selection Problems |
|
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378 | (2) |
|
Conflicts of Interest The Enron Implosion |
|
|
380 | (3) |
|
How Moral Hazard Affects the Choice Between Debt and Equity Contracts |
|
|
383 | (1) |
|
Moral Hazard in Equity Contracts: The Principal-Agent Problem |
|
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383 | (1) |
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Tools to Help Solve the Principal-Agent Problem |
|
|
384 | (1) |
|
Conflicts of Interest ``Hollywood Accounting'': Was Forrest Gump a Money Loser? |
|
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384 | (2) |
|
How Moral Hazard Influences Financial Structure in Debt Markets |
|
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386 | (4) |
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Tools to Help Solve Moral Hazard in Debt Contracts |
|
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387 | (2) |
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|
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389 | (1) |
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Case Financial Development and Economic Growth |
|
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390 | (1) |
|
Financial Crises and Aggregate Economic Activity |
|
|
391 | (3) |
|
Factors Causing Financial Crises |
|
|
391 | (3) |
|
Case Financial Crises in the United States |
|
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394 | (2) |
|
Mini-Case Case Study of a Financial Crisis: The Great Depression |
|
|
396 | (1) |
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Case Financial Crises in Emerging Market Countries: Mexico, 1994--1995, East Asia, 1997--1998, and Argentina, 2001--2002 |
|
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396 | (4) |
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400 | (1) |
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401 | (1) |
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401 | (1) |
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401 | (1) |
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Web Exercises: Why Do Financial Institutions Exist? |
|
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402 | (1) |
|
What Should Be Done About Conflicts of Interest in the Financial Industry? |
|
|
403 | (20) |
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403 | (1) |
|
What Are Conflicts of Interest and Why Are They Important? |
|
|
404 | (1) |
|
Ethics and Conflicts of Interest |
|
|
405 | (1) |
|
Types of Conflicts of Interest |
|
|
405 | (1) |
|
Underwriting and Research in Investment Banking |
|
|
405 | (1) |
|
Conflicts of Interest The King, Queen, and Jack of the Internet |
|
|
406 | (1) |
|
Conflicts of Interest Frank Quattrone and Spinning |
|
|
407 | (1) |
|
Auditing and Consulting in Accounting Firms |
|
|
407 | (1) |
|
Credit Assessment and Consulting in Credit-Rating Agencies |
|
|
407 | (1) |
|
Conflicts of Interest The Demise of Arthur Andersen |
|
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408 | (1) |
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408 | (1) |
|
Mini-Case Why Do Issuers of Securities Pay to Have Their Securities Rated? |
|
|
409 | (1) |
|
When Are Conflicts of Interest a Serious Problem? |
|
|
409 | (1) |
|
Conflicts of Interest Banksters |
|
|
410 | (2) |
|
What Has Been Done to Remedy Conflicts of Interest? |
|
|
412 | (2) |
|
Sarbanes-Oxley Act of 2002 |
|
|
413 | (1) |
|
Global Legal Settlement of 2002 |
|
|
413 | (1) |
|
A Framework for Evaluating Policies to Remedy Conflicts of Interest |
|
|
414 | (3) |
|
Approaches to Remedying Conflicts of Interest |
|
|
415 | (2) |
|
Case Evaluating Sarbanes-Oxley and the Global Settlement |
|
|
417 | (2) |
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419 | (1) |
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420 | (1) |
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420 | (1) |
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420 | (1) |
|
Web Exercises: What Should Be Done About Conflicts of Interest in the Financial Industry? |
|
|
421 | (2) |
|
PART SIX THE FINANCIAL INSTITUTIONS INDUSTRY |
|
|
423 | (192) |
|
Banking and the Management of Financial Institutions |
|
|
425 | (26) |
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|
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425 | (1) |
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425 | (4) |
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|
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426 | (2) |
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|
|
428 | (1) |
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|
|
429 | (2) |
|
General Principles of Bank Management |
|
|
431 | (7) |
|
Liquidity Management and the Role of Reserves |
|
|
432 | (2) |
|
|
|
434 | (1) |
|
|
|
435 | (1) |
|
Capital Adequacy Management |
|
|
436 | (2) |
|
The Practicing Manager Strategies for Managing Bank Capital |
|
|
438 | (1) |
|
Case Did the Capital Crunch Cause a Credit Crunch in the Early 1990s? |
|
|
439 | (1) |
|
Off-Balance-Sheet Activities |
|
|
440 | (2) |
|
|
|
440 | (1) |
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|
|
440 | (1) |
|
Trading Activities and Risk Management Techniques |
|
|
441 | (1) |
|
Conflicts of Interest Barings, Daiwa, and Sumitomo: Rogue Traders and the Principal-Agent Problem |
|
|
442 | (1) |
|
Measuring Bank Performance |
|
|
443 | (4) |
|
|
|
443 | (2) |
|
Measures of Bank Performance |
|
|
445 | (1) |
|
Recent Trends in Bank Performance Measures |
|
|
446 | (1) |
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|
|
447 | (1) |
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|
|
448 | (1) |
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448 | (1) |
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|
|
449 | (1) |
|
Web Exercises: Banking and the Management of Financial Institutions |
|
|
450 | (1) |
|
Commercial Banking Industry: Structure and Competition |
|
|
451 | (34) |
|
|
|
451 | (1) |
|
Historical Development of the Banking System |
|
|
451 | (3) |
|
Multiple Regulatory Agencies |
|
|
453 | (1) |
|
Financial Innovation and the Evolution of the Banking Industry |
|
|
454 | (4) |
|
Responses to Changes in Demand Conditions |
|
|
455 | (1) |
|
Responses to Changes in Supply Conditions |
|
|
456 | (2) |
|
E-Finance Will ``Clicks'' Dominate ``Bricks'' in the Banking Industry? |
|
|
458 | (1) |
|
E-Finance Why Are Scandinavians so Far Ahead of Americans in Using Electronic Payments and On-Line Banking? |
|
|
459 | (1) |
|
E-Finance Are We Headed for a Cashless Society? |
|
|
460 | (4) |
|
Avoidance of Existing Regulations |
|
|
461 | (3) |
|
The Practicing Manager Profiting from a New Financial Product: A Case Study of Treasury Strips |
|
|
464 | (5) |
|
Financial Innovation and the Decline of Traditional Banking |
|
|
466 | (3) |
|
Structure of the U.S. Commercial Banking Industry |
|
|
469 | (3) |
|
Restrictions on Branching |
|
|
470 | (1) |
|
Response to Branching Restrictions |
|
|
471 | (1) |
|
Bank Consolidation and Nationwide Banking |
|
|
472 | (2) |
|
Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 |
|
|
474 | (1) |
|
E-Finance Information Technology and Bank Consolidation |
|
|
474 | (2) |
|
What Will the Structure of the U.S. Banking Industry Look Like in the Future? |
|
|
475 | (1) |
|
Are Bank Consolidation and Nationwide Banking Good Things? |
|
|
475 | (1) |
|
Global Comparison of Banking Structures in the United States and Abroad |
|
|
476 | (1) |
|
Separation of Banking and Other Financial Service Industries |
|
|
477 | (2) |
|
Erosion of Glass-Steagall |
|
|
477 | (1) |
|
The Gramm-Leach-Bliley Financial Services Modernization Act of 1999: Repeal of Glass-Steagall |
|
|
477 | (1) |
|
Implications for Financial Consolidation |
|
|
478 | (1) |
|
Separation of Banking and Other Financial Services Industries Throughout the World |
|
|
478 | (1) |
|
|
|
479 | (3) |
|
|
|
479 | (1) |
|
Structure of U.S. Banking Overseas |
|
|
480 | (1) |
|
Foreign Banks in the United States |
|
|
481 | (1) |
|
|
|
482 | (1) |
|
|
|
483 | (1) |
|
|
|
483 | (1) |
|
Web Exercises: Commercial Banking Industry: Structure and Competition |
|
|
484 | (1) |
|
Savings Associations and Credit Unions |
|
|
485 | (28) |
|
|
|
485 | (1) |
|
|
|
485 | (1) |
|
Savings and Loan Associations |
|
|
486 | (2) |
|
Mutual Savings Banks and Savings and Loans Compared |
|
|
488 | (1) |
|
Savings and Loans in Trouble: The Thrift Crisis |
|
|
488 | (2) |
|
Later Stages of the Crisis: Regulatory Forbearance |
|
|
489 | (1) |
|
Competitive Equality in Banking Act of 1987 |
|
|
490 | (1) |
|
Political Economy of the Savings and Loan Crisis |
|
|
490 | (2) |
|
Principal-Agent Problem for Regulators and Politicians |
|
|
491 | (1) |
|
Case Principal-Agent Problem in Action: Charles Keating and the Lincoln Savings and Loan Scandal |
|
|
492 | (1) |
|
Savings and Loan Bailout: Financial Institutions Reform, Recovery, and Enforcement Act of 1989 |
|
|
493 | (1) |
|
The Savings and Loan Industry Today |
|
|
494 | (7) |
|
|
|
494 | (2) |
|
|
|
496 | (1) |
|
|
|
497 | (1) |
|
S&L Liabilities and Net Worth |
|
|
497 | (1) |
|
|
|
498 | (1) |
|
|
|
498 | (2) |
|
The Future of the Savings and Loan Industry |
|
|
500 | (1) |
|
|
|
501 | (9) |
|
|
|
501 | (5) |
|
|
|
506 | (1) |
|
|
|
507 | (1) |
|
Advantages and Disadvantages of Credit Unions |
|
|
508 | (1) |
|
The Future of Credit Unions |
|
|
509 | (1) |
|
|
|
510 | (1) |
|
|
|
510 | (1) |
|
|
|
510 | (1) |
|
Web Exercises: Savings Associations and Credit Unions |
|
|
511 | (2) |
|
|
|
513 | (24) |
|
|
|
513 | (1) |
|
Asymmetric Information and Bank Regulation |
|
|
513 | (2) |
|
Government Safety Net: Deposit Insurance and the FDIC |
|
|
513 | (2) |
|
Global The Spread of Government Deposit Insurance Throughout the World: Is This a Good Thing? |
|
|
515 | (4) |
|
Restrictions on Asset Holdings and Bank Capital Requirements |
|
|
517 | (2) |
|
Mini-Case Basel 2: Is It Spinning Out of Control? |
|
|
519 | (4) |
|
Bank Supervision: Chartering and Examination |
|
|
519 | (1) |
|
A New Trend in Bank Supervision: Assessment of Risk Management |
|
|
520 | (1) |
|
|
|
521 | (1) |
|
|
|
522 | (1) |
|
Restrictions on Competition |
|
|
522 | (1) |
|
E-Finance Electronic Banking: New Challenges for Bank Regulation |
|
|
523 | (1) |
|
International Banking Regulation |
|
|
523 | (3) |
|
Problems in Regulating International Banking |
|
|
525 | (1) |
|
|
|
525 | (1) |
|
The 1980s U.S. Banking Crisis |
|
|
526 | (1) |
|
Federal Deposit Insurance Corporation Improvement Act of 1991 |
|
|
527 | (1) |
|
Banking Crises Throughout the World |
|
|
528 | (6) |
|
|
|
529 | (1) |
|
|
|
530 | (1) |
|
Russia and Eastern Europe |
|
|
531 | (1) |
|
|
|
531 | (2) |
|
|
|
533 | (1) |
|
|
|
533 | (1) |
|
``Deja Vu All Over Again'' |
|
|
534 | (1) |
|
|
|
534 | (1) |
|
|
|
534 | (1) |
|
|
|
535 | (1) |
|
|
|
535 | (1) |
|
Web Exercises: Banking Regulation |
|
|
536 | |
|
Appendix: Evaluating FDICIA and Other Proposed Reforms of the Banking Regulatory System |
|
|
49 | (488) |
|
|
|
537 | (24) |
|
|
|
537 | (1) |
|
The Growth of Mutual Funds |
|
|
537 | (4) |
|
|
|
538 | (1) |
|
|
|
538 | (1) |
|
Ownership of Mutual Funds |
|
|
539 | (2) |
|
|
|
541 | (2) |
|
Open- Versus Closed-End Funds |
|
|
542 | (1) |
|
|
|
542 | (1) |
|
Case Calculating a Mutual Fund's Net Asset Value |
|
|
543 | (1) |
|
Investment Objective Classes |
|
|
544 | (5) |
|
|
|
544 | (1) |
|
|
|
545 | (1) |
|
|
|
546 | (1) |
|
|
|
546 | (2) |
|
|
|
548 | (1) |
|
Fee Structure of Investment Funds |
|
|
549 | (1) |
|
Regulation of Mutual Funds |
|
|
550 | (1) |
|
|
|
551 | (2) |
|
Mini-Case The Long Term Capital Debacle |
|
|
553 | (1) |
|
Conflicts of Interest in the Mutual Fund Industry |
|
|
554 | (1) |
|
Sources of Conflicts of Interest |
|
|
554 | (1) |
|
|
|
554 | (1) |
|
Conflicts of Interest Many Mutual Funds Are Caught Ignoring Ethical Standards |
|
|
555 | (2) |
|
Government Response to Abuses |
|
|
556 | (1) |
|
Conflicts of Interest SEC Survey Reports Mutual Fund Abuses Widespread |
|
|
557 | (1) |
|
|
|
558 | (1) |
|
|
|
558 | (1) |
|
|
|
558 | (1) |
|
|
|
559 | (1) |
|
Web Exercises: Investment Banks, Brokerage Firms, and Mutual Funds |
|
|
560 | (1) |
|
Insurance Companies and Pension Funds |
|
|
561 | (30) |
|
|
|
561 | (1) |
|
|
|
562 | (1) |
|
Fundamentals of Insurance |
|
|
563 | (2) |
|
Adverse Selection and Moral Hazard in Insurance |
|
|
563 | (1) |
|
|
|
564 | (1) |
|
Growth and Organization of Insurance Companies |
|
|
565 | (1) |
|
|
|
565 | (1) |
|
Mini-Case Insurance Agent: The Customer's Ally |
|
|
565 | (2) |
|
|
|
566 | (1) |
|
Global The Woes of Lloyd's of London |
|
|
567 | (8) |
|
|
|
571 | (1) |
|
Property and Casualty Insurance |
|
|
572 | (2) |
|
|
|
574 | (1) |
|
Conflicts of Interest Insurance Behemoth Charged with Conflicts of Interest Violations |
|
|
575 | (1) |
|
The Practicing Manager Insurance Management |
|
|
575 | (4) |
|
|
|
579 | (1) |
|
|
|
579 | (3) |
|
Defined-Benefit Pension Plans |
|
|
579 | (1) |
|
Defined-Contribution Pension Plans |
|
|
580 | (1) |
|
Private and Public Pension Plans |
|
|
581 | (1) |
|
Mini-Case Power to the Pensions |
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582 | (3) |
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Regulation of Pension Plans |
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585 | (2) |
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Employee Retirement Income Security Act |
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585 | (2) |
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Individual Retirement Plans |
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587 | (1) |
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The Future of Pension Funds |
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587 | (1) |
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587 | (1) |
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588 | (1) |
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588 | (1) |
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588 | (1) |
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Web Exercises: Insurance Companies and Pension Funds |
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589 | (2) |
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Investment Banks, Security Brokers and Dealers, and Venture Capital Firms |
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591 | (24) |
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591 | (1) |
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592 | (5) |
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592 | (1) |
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Underwriting Stocks and Bonds |
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593 | (4) |
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The Wall Street Journal: Following the News New Securities Issues |
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597 | (3) |
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598 | (1) |
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599 | (1) |
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Securities Brokers and Dealers |
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600 | (3) |
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600 | (3) |
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Mini-Case Example of Using the Limit-Order Book |
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603 | (1) |
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604 | (1) |
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Regulation of Securities Firms |
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604 | (1) |
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Relationship Between Securities Firms and Commercial Banks |
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605 | (1) |
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606 | (5) |
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606 | (1) |
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Venture Capitalists Reduce Asymmetric Information |
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607 | (1) |
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Origins of Venture Capital |
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608 | (1) |
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Structure of Venture Capital Firms |
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609 | (1) |
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609 | (2) |
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E-Finance Venture Capitalists Lose Focus with Internet Companies |
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|
611 | (1) |
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611 | (1) |
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611 | (1) |
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612 | (1) |
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|
612 | (1) |
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Web Exercises: Investment Banks, Security Brokers and Dealers, and Venture Capital Firms |
|
|
613 | (2) |
|
PART SEVEN THE MANAGEMENT OF FINANCIAL INSTITUTIONS |
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|
615 | |
|
Risk Management in Financial Institutions |
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617 | (22) |
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617 | (1) |
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617 | (5) |
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618 | (1) |
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Long-Term Customer Relationships |
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619 | (1) |
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620 | (1) |
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620 | (1) |
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620 | (1) |
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621 | (1) |
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Managing Interest-Rate Risk |
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622 | (10) |
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623 | (2) |
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|
625 | (4) |
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Example of a Nonbanking Financial Institution |
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|
629 | (2) |
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Some Problems with Income and Duration Gap Analysis |
|
|
631 | (1) |
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The Practicing Manager Strategies for Managing Interest-Rate Risk |
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|
632 | (2) |
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634 | (1) |
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|
|
634 | (1) |
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|
634 | (1) |
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|
|
634 | (3) |
|
Web Exercises: Risk Management in Financial Institutions |
|
|
637 | (2) |
|
Hedging with Financial Derivatives |
|
|
639 | |
|
|
|
639 | (1) |
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|
639 | (1) |
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|
|
640 | (1) |
|
Interest-Rate Forward Contracts |
|
|
640 | (1) |
|
The Practicing Manager Hedging Interest-Rate Risk with Forward Contracts |
|
|
640 | (2) |
|
Pros and Cons of Forward Contracts |
|
|
641 | (1) |
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Financial Futures Markets |
|
|
642 | (1) |
|
Financial Futures Contracts |
|
|
642 | (1) |
|
The Wall Street Journal: Following the News Financial Futures |
|
|
643 | (1) |
|
The Practicing Manager Hedging with Financial Futures |
|
|
644 | (5) |
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Organization of Trading in Financial Futures Markets |
|
|
646 | (1) |
|
Globalization of Financial Futures Markets |
|
|
646 | (2) |
|
Explaining the Success of Futures Markets |
|
|
648 | (1) |
|
Mini-Case The Hunt Brothers and the Silver Crash |
|
|
649 | (1) |
|
The Practicing Manager Hedging Foreign Exchange Risk with Forward and Futures Contracts |
|
|
650 | (2) |
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|
|
652 | (1) |
|
Stock Index Futures Contracts |
|
|
652 | (1) |
|
Mini-Case Program Trading and Portfolio Insurance: Were They to Blame for the Stock Market Crash of 1987? |
|
|
653 | (1) |
|
The Wall Street Journal: Following The News Stock Index Futures |
|
|
654 | (1) |
|
The Practicing Manager Hedging with Stock Index Futures |
|
|
654 | (1) |
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|
|
655 | (1) |
|
The Wall Street Journal: Following The News Futures Options |
|
|
656 | (6) |
|
|
|
657 | (1) |
|
Profits and Losses on Option and Futures Contracts |
|
|
657 | (3) |
|
Factors Affecting the Prices of Option Premiums |
|
|
660 | (1) |
|
|
|
661 | (1) |
|
The Practicing Manager Hedging with Futures Options |
|
|
662 | (1) |
|
|
|
663 | (1) |
|
Interest-Rate Swap Contracts |
|
|
663 | (1) |
|
The Practicing Manager Hedging with Interest-Rate Swaps |
|
|
664 | (3) |
|
Advantages of Interest-Rate Swaps |
|
|
665 | (1) |
|
Disadvantages of Interest-Rate Swaps |
|
|
666 | (1) |
|
Financial Intermediaries in Interest-Rate Swaps |
|
|
666 | (1) |
|
Case Are Financial Derivatives a Worldwide Time Bomb? |
|
|
667 | (1) |
|
Conflicts of Interest The Orange County Bankruptcy |
|
|
668 | (1) |
|
|
|
669 | (1) |
|
|
|
670 | (1) |
|
|
|
670 | (1) |
|
|
|
670 | (2) |
|
Web Exercises: Hedging with Financial Derivatives |
|
|
672 | |
|
Appendix: More on Hedging with Financial Derivatives |
|
|
55 | |
|
|
|
1 | (1) |
| Glossary |
|
1 | (1) |
| Index |
|
1 | |
Other versions by this Author
