Frederic Mishkin, Stanley Eakins
Global Edition
10. Auflage
Erscheinungsjahr: 2023
Print-ISBN: 978-1-292-45954-7
E-ISBN: 978-1-292-45953-0
Seiten: 688
Sprache: Englisch
Printausgabe kaufen
Zitierung exportieren
Mishkin, F., & Eakins, S. (2023). Financial Markets and Institutions. (10th ed.). Pearson International. https://elibrary.pearson.de/book/99.150005/9781292459530
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Zusammenfassung
Financial Markets and Institutions takes a practical approach to the changing landscape of financial markets and institutions. The text uses core principles to introduce topics, then examines these models via real-world scenarios. Empirical applications of themes help you develop essential critical-thinking and problem-solving skills. The 10th Edition reflects major changes in the aftermath of the global financial and Covid crises. With timely new sections, cases and boxes, youll have the latest, most relevant information to help prepare you for your future career.
Inhaltsverzeichnis
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Cover
1
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1
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Half Title
2
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3
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Title Page
4
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4
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Copyright Page
5
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5
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Dedication
6
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6
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Pearson’s Commitment to Diversity, Equity, and Inclusion
7
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7
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Contents in Brief
8
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9
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Contents in Detail
10
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27
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Additional Materials
28
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31
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Preface
32
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39
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About the Authors
40
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41
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Part One: Introduction
42
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77
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Chapter 1. Why Study Financial Markets and Institutions?
42
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55
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Preview
42
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42
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Why Study Financial Markets?
43
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46
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Debt Markets and Interest Rates
43
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43
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The Stock Market
44
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44
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The Foreign Exchange Market
44
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46
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Why Study Financial Institutions?
47
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49
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Structure of the Financial System
47
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46
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Financial Crises
47
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47
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Central Banks and the Conduct of Monetary Policy
48
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47
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Mini-Case: Are Bitcoin or Other Cryptocurrencies Money?
48
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48
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The International Financial System
49
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48
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Banks and Other Financial Institutions
49
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48
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Financial Innovation
49
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49
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Managing Risk in Financial Institutions
49
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49
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Applied Managerial Perspective
50
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49
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How We Will Study Financial Markets and Institutions
50
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51
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Exploring the Web
51
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50
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Collecting and Graphing Data
50
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51
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Web Exercise
52
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52
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Concluding Remarks
53
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53
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Summary
54
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53
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Key Terms
54
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53
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Questions
54
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54
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Quantitative Problem
55
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54
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Web Exercises
54
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55
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Chapter 2. Overview of the Financial System
56
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77
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Preview
56
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56
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Function of Financial Markets
57
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58
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Structure of Financial Markets
59
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60
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Debt and Equity Markets
59
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58
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Primary and Secondary Markets
59
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59
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Exchanges and Over-the-Counter Markets
60
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60
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Money and Capital Markets
60
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60
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Internationalization of Financial Markets
61
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62
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International Bond Market, Eurobonds, and Eurocurrencies
61
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61
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Global: Are U.S. Capital Markets Losing Their Edge?
62
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62
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World Stock Markets
62
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62
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Following the Financial News: Foreign Stock Market Indexes
64
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63
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Global: The Importance of Financial Intermediaries Relative to Securities Markets: An International Comparison
64
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63
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Transaction Costs
64
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64
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Risk Sharing
65
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65
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Asymmetric Information: Adverse Selection and Moral Hazard
66
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66
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Economies of Scope and Conflicts of Interest
66
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67
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Types of Financial Intermediaries
68
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71
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Depository Institutions
68
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68
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Contractual Savings Institutions
69
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70
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Investment Intermediaries
70
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71
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Regulation of the Financial System
72
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74
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Increasing Information Available to Investors
73
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72
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Ensuring the Soundness of Financial Intermediaries
73
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73
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Financial Regulation Abroad
73
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74
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Summary
75
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75
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Key Terms
76
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75
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Questions
76
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76
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Web Exercises
76
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77
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Part Two: Fundamentals of Financial Markets
78
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203
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Chapter 3. What Do Interest Rates Mean, and What Is Their Role in Valuation?
78
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105
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Preview
78
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78
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Measuring Interest Rates
79
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88
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Present Value
79
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80
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Four Types of Credit Market Instruments
81
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81
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Yield to Maturity
82
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87
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The Distinction Between Real and Nominal Interest Rates
89
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91
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Mini-Case: Seeing the Difference Between Real and Nominal in Practice: Australian eTIBs
90
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91
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The Distinction Between Interest Rates and Returns
92
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102
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Maturity and the Volatility of Bond Returns: Interest-Rate Risk
95
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95
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Reinvestment Risk
96
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95
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Summary
96
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96
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The Practicing Manager: Calculating Duration to Measure Interest-Rate Risk
97
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97
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Calculating Duration
98
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100
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Duration and Interest-Rate Risk
100
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102
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Summary
103
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102
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Key Terms
103
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103
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Questions
104
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103
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Quantitative Problems
104
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104
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Web Exercise
104
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105
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Chapter 4. Why Do Interest Rates Change?
106
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158
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Preview
106
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106
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Determinants of Asset Demand
107
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109
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Wealth
107
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106
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Expected Returns
107
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107
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Risk
108
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109
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Liquidity
110
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109
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Theory of Portfolio Choice
109
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109
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Supply and Demand in the Bond Market
110
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113
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Demand Curve
111
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111
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Supply Curve
112
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112
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Market Equilibrium
113
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113
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Supply-and-Demand Analysis
113
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113
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Changes in Equilibrium Interest Rates
114
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125
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Shifts in the Demand for Bonds
115
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117
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Shifts in the Supply of Bonds
118
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119
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Case: Changes in the Interest Rate Due to Expected Inflation: The Fisher Effect
120
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121
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Case: Changes in the Interest Rate Due to a Business Cycle Expansion
122
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122
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Case: Explaining the Low Interest Rates in Europe, Japan, and the United States Before 2022
123
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123
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The Practicing Manager: Profiting from Interest-Rate Forecasts
124
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125
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Following the Financial News: Forecasting Interest Rates
125
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125
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Summary
126
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125
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Key Terms
126
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125
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Questions
126
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126
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Quantitative Problems
127
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127
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Web Exercises
128
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127
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Web Appendices
128
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128
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Chapter 4 Appendix 1: Models of Asset Pricing
129
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138
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Chapter 4 Appendix 2: Applying the Asset Market Approach to a Commodity Market: The Case of Gold
139
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142
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Chapter 4 Appendix 3: Loanable Funds Framework
143
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146
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Chapter 4 Appendix 4: Supply and Demand in the Market for Money: The Liquidity Preference Framework
146
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158
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Chapter 5. How Do Risk and Term Structure Affect Interest Rates?
159
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185
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Preview
159
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159
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Risk Structure of Interest Rates
160
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166
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Default Risk
160
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162
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Liquidity
163
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162
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Case: The Coronavirus Pandemic and the Baa–Treasury Spread
163
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163
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Income Tax Considerations
164
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164
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Summary
165
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165
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Case: Effects of the Trump Tax Cuts on Bond Interest Rates
165
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166
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Term Structure of Interest Rates
167
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182
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Following the Financial News: Yield Curves
168
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167
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Expectations Theory
168
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171
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Market Segmentation Theory
172
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172
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Liquidity Premium Theory
173
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175
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Evidence on the Term Structure
176
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177
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Mini-Case: The Yield Curve as a Forecasting Tool for Inflation and the Business Cycle
178
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177
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Summary
178
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178
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Case: Interpreting Yield Curves, 1980–2022
179
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179
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The Practicing Manager: Using the Term Structure to Forecast Interest Rates
179
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182
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Summary
183
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182
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Key Terms
183
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182
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Questions
183
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183
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Quantitative Problems
184
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184
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Web Exercises
184
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185
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Chapter 6. Are Financial Markets Efficient?
186
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203
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Preview
186
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186
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The Efficient Market Hypothesis
187
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189
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Rationale Behind the Hypothesis
188
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189
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Evidence on the Efficient Market Hypothesis
190
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198
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Evidence in Favor of Market Efficiency
190
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190
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Mini-Case: An Exception That Proves the Rule: Raj Rajaratnam and Galleon
191
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192
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Case: Should Foreign Exchange Rates Follow a Random Walk?
193
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193
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Evidence Against Market Efficiency
194
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195
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Overview of the Evidence on the Efficient Market Hypothesis
196
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195
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The Practicing Manager: Practical Guide to Investing in the Stock Market
196
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195
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How Valuable Are Published Reports by Investment Advisers?
196
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196
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Mini-Case: Should You Hire an Ape as Your Investment Adviser?
197
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196
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Should You Be Skeptical of Hot Tips?
197
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197
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Do Stock Prices Always Rise When There Is Good News?
198
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197
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Efficient Markets Prescription for the Investor
197
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198
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Why the Efficient Market Hypothesis Does Not Imply That Financial Markets Are Efficient
199
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199
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Case: What Do Stock Market Crashes Tell Us About the Efficient Market Hypothesis?
199
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199
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Behavioral Finance
200
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200
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Summary
201
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201
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Key Terms
202
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201
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Questions
202
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202
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Quantitative Problems
203
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202
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Web Exercise
202
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203
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Part Three: Fundamentals of Financial Institutions
204
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254
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Chapter 7. Why Do Financial Institutions Exist?
204
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234
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Preview
204
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204
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Basic Facts About Financial Structure Throughout the World
205
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207
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Transaction Costs
208
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208
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How Transaction Costs Influence Financial Structure
208
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207
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How Financial Intermediaries Reduce Transaction Costs
207
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208
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Asymmetric Information: Adverse Selection and Moral Hazard
209
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209
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The Lemons Problem: How Adverse Selection Influences Financial Structure
210
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215
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Lemons in the Stock and Bond Markets
211
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210
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Tools to Help Solve Adverse Selection Problems
211
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212
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Mini-Case: The Enron Implosion
212
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215
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How Moral Hazard Affects the Choice Between Debt and Equity Contracts
216
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218
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Moral Hazard in Equity Contracts: The Principal–Agent Problem
216
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216
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Tools to Help Solve the Principal–Agent Problem
216
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218
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How Moral Hazard Influences Financial Structure in Debt Markets
219
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225
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Tools to Help Solve Moral Hazard in Debt Contracts
219
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220
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Summary
221
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222
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Case: Financial Development and Economic Growth
223
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223
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Mini-Case: The Tyranny of Collateral
224
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224
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Case: Is China a Counter-Example to the Importance of Financial Development?
224
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225
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Conflicts of Interest
226
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230
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What Are Conflicts of Interest, and Why Do We Care?
226
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225
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Why Do Conflicts of Interest Arise?
226
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227
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Conflicts of Interest: The Demise of Arthur Andersen
228
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228
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Conflicts of Interest: Credit-Rating Agencies and the 2007–2009 Financial Crisis
229
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228
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What Has Been Done to Remedy Conflicts of Interest?
229
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230
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Mini-Case: Has Sarbanes-Oxley Led to a Decline in U.S. Capital Markets?
230
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230
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Summary
231
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231
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Key Terms
232
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231
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Questions
232
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232
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Quantitative Problems
233
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233
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Web Exercises
233
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234
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Chapter 8. Why Do Financial Crises Occur, and Why Are They So Damaging to the Economy?
235
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254
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Preview
235
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235
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+
What Is a Financial Crisis?
236
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235
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Agency Theory and the Definition of a Financial Crisis
235
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235
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Dynamics of Financial Crises
236
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251
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Stage One: Initial Phase
236
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238
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Stage Two: Banking Crisis
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Stage Three: Debt Deflation
240
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239
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Case: The Mother of All Financial Crises: The Great Depression
240
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239
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Stock Market Crash
240
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239
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Bank Panics
240
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240
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Continuing Decline in Stock Prices
241
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241
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Debt Deflation
242
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241
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International Dimensions
242
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242
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Case: The Global Financial Crisis of 2007–2009
243
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242
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Causes of the 2007–2009 Financial Crisis
243
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243
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Mini-Case: Collateralized Debt Obligations (CDOs)
244
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244
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Effects of the 2007–2009 Financial Crisis
245
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245
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Inside the Fed: Was the Fed to Blame for the Housing Price Bubble?
246
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248
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Global: The European Sovereign Debt Crisis
249
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249
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Height of the 2007–2009 Financial Crisis
250
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250
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Case: Could Covid Have Led to a Financial Crisis?
250
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251
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Summary
252
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252
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Key Terms
253
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252
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Questions
253
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253
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Web Exercise
254
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253
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Web References
253
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254
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Part Four: Central Banking and the Conduct of Monetary Policy
255
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314
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+
Chapter 9. Central Banks
255
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272
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Preview
255
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255
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Origins of the Central Banking System
256
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255
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+
Variations in the Functions and Structures of Central Banks
256
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265
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Global: Who Should Own Central Banks?
257
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256
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The European Central Bank, the Euro System, and the European System of Central Banks
257
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257
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Decision-Making Bodies of the ECB
258
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260
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Global: The Importance of the Bundesbank Within the ECB
261
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261
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How Monetary Policy Is Conducted Within the ECB
262
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262
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Global: Are Non-Euro Central Banks Constrained by Membership of the EU?
263
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262
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The Federal Reserve System
263
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263
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Difference Between the ECB and the Fed
264
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264
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The Bank of England
265
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265
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Global: Brexit and the BoE
265
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265
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Structure of Central Banks of Larger Economies
266
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268
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The Bank of Canada
266
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266
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The Bank of Japan
267
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267
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The People’s Bank of China
267
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268
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Structure and Independence of Central Banks of Emerging Market Economies
269
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268
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+
Central Banks Independence
269
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270
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The Case for Independence
270
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269
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The Case Against Independence
270
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269
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The Trend Toward Greater Independence
269
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270
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Summary
271
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271
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Key Terms
272
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271
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Questions and Problems
272
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271
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Web Exercises
271
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272
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+
Chapter 10. Conduct of Monetary Policy
273
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314
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Preview
273
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273
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+
How Fed Actions Affect Reserves in the Banking System
274
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275
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Open Market Operations
274
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274
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Discount Lending
274
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275
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The Market for Reserves and the Federal Funds Rate
276
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282
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Demand and Supply in the Market for Reserves
276
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277
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How Changes in the Tools of Monetary Policy Affect the Federal Funds Rate
278
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281
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Case: How the Federal Reserve’s Operating Procedures Limit Fluctuations in the Federal Funds Rate
281
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282
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+
Conventional Monetary Policy Tools
283
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286
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Open Market Operations
283
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283
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Inside the Fed: A Day at the Trading Desk
284
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283
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Discount Policy and the Lender of Last Resort
284
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286
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Reserve Requirements
287
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286
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Interest on Excess Reserves
286
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286
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+
Nonconventional Monetary Policy Tools and Quantitative Easing
287
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294
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Liquidity Provision
288
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288
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Inside the Fed: Fed Lending Facilities During the Global Financial and Covid Crises
289
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289
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Large-Scale Asset Purchases
290
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290
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Quantitative Easing Versus Credit Easing
291
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291
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Forward Guidance
292
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293
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Negative Interest Rates on Banks’ Deposits
293
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294
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+
Monetary Policy Tools of the European Central Bank
295
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295
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Open Market Operations
295
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294
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Lending to Banks
295
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295
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Interest on Excess Reserves
296
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295
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Reserve Requirements
295
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295
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+
The Price Stability Goal and the Nominal Anchor
296
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297
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The Role of a Nominal Anchor
297
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296
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The Time-Inconsistency Problem
296
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297
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Other Goals of Monetary Policy
298
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299
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High Employment and Output Stability
298
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298
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Economic Growth
299
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298
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Stability of Financial Markets
299
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298
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Interest-Rate Stability
299
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299
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Stability in Foreign Exchange Markets
299
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299
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+
Should Price Stability Be the Primary Goal of Monetary Policy?
300
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301
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Hierarchical Versus Dual Mandates
300
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300
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Price Stability as the Primary, Long-Run Goal of Monetary Policy
300
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301
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Inflation Targeting
302
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304
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Advantages of Inflation Targeting
302
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302
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Inside the Fed: Ben Bernanke and the Federal Reserve’s Adoption of Inflation Targeting
303
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303
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Inside the Fed: The Fed’s New Monetary Policy Strategy: Average Inflation Targeting
304
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303
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Disadvantages of Inflation Targeting
303
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304
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Should Central Banks Respond to Asset-Price Bubbles? Lessons from the Global Financial Crisis
305
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310
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Two Types of Asset-Price Bubbles
306
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306
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The Debate over Whether Central Banks Should Try to Pop Bubbles
307
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309
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The Practicing Manager: Using a Fed Watcher
309
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310
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Summary
311
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311
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Key Terms
312
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311
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Questions
312
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312
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Quantitative Problems
313
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313
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Web Exercises
313
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314
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-
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+
Part Five: Financial Markets
315
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450
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+
Chapter 11. The Money Markets
315
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337
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Preview
315
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315
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+
The Money Markets Defined
316
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317
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Why Do We Need the Money Markets?
316
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316
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Money Market Cost Advantages
316
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317
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+
The Purpose of the Money Markets
318
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318
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Mini-Case: Covid and Prime Money Market Fund Withdrawals
318
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318
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+
Who Participates in the Money Markets?
319
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321
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U.S. Treasury Department
319
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319
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Federal Reserve System
320
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319
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Commercial Banks
320
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320
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Businesses
321
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320
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Investment and Securities Firms
321
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320
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Individuals
320
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321
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Money Market Instruments
322
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332
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Treasury Bills
322
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321
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Case: Discounting the Price of Treasury Securities to Pay the Interest
322
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324
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Mini-Case: Treasury Bill Auctions Go Haywire
325
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325
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Federal Funds
326
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326
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Repurchase Agreements
327
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327
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Negotiable Certificates of Deposit
328
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328
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Commercial Paper
329
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330
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Banker’s Acceptances
331
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331
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Eurodollars
332
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331
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Global: Ironic Birth of the Eurodollar Market
331
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332
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+
Comparing Money Market Securities
333
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335
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Interest Rates
333
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333
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Liquidity
334
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334
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How Money Market Securities Are Valued
334
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335
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Summary
336
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335
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Key Terms
336
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335
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Questions
336
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336
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Quantitative Problems
337
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336
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Web Exercises
336
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337
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+
Chapter 12. The Bond Market
338
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362
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Preview
338
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338
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Purpose of the Capital Market
339
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338
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Capital Market Participants
339
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339
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Capital Market Trading
340
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339
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Types of Bonds
340
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339
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+
Treasury Notes and Bonds
340
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344
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Treasury Bond Interest Rates
341
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342
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Treasury Inflation-Protected Securities (TIPS)
343
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342
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Treasury STRIPS
343
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342
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Agency Bonds
343
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343
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Case: The 2007–2009 Financial Crisis and the Bailout of Fannie Mae and Freddie Mac
343
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344
-
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+
Municipal Bonds
345
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346
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Risk in the Municipal Bond Market
346
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346
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+
Corporate Bonds
347
-
352
-
Characteristics of Corporate Bonds
348
-
349
-
Types of Corporate Bonds
349
-
352
-
-
Financial Guarantees for Bonds
353
-
353
-
Oversight of the Bond Markets
354
-
353
-
+
Current Yield Calculation
354
-
355
-
Current Yield
354
-
355
-
-
+
Finding the Value of Coupon Bonds
356
-
358
-
Finding the Price of Semiannual Bonds
356
-
358
-
-
Investing in Bonds
359
-
359
-
Summary
360
-
360
-
Key Terms
361
-
360
-
Questions
361
-
360
-
Quantitative Problems
360
-
362
-
-
+
Chapter 13. The Stock Market
363
-
383
-
Preview
363
-
363
-
+
Investing in Stocks
364
-
368
-
Common Stock Versus Preferred Stock
364
-
364
-
How Stocks Are Sold
364
-
368
-
-
+
Computing the Price of Common Stock
369
-
372
-
The One-Period Valuation Model
369
-
369
-
The Generalized Dividend Valuation Model
370
-
370
-
The Gordon Growth Model
371
-
371
-
Price Earnings Valuation Method
371
-
372
-
-
How the Market Sets Security Prices
373
-
373
-
+
Errors in Valuation
374
-
375
-
Problems with Estimating Growth
374
-
374
-
Problems with Estimating Risk
375
-
374
-
Problems with Forecasting Dividends
375
-
375
-
Mini-Case: Covid Impact on Stock Markets
375
-
375
-
-
+
Stock Market Indexes
376
-
377
-
Mini-Case: History of the Dow Jones Industrial Average
376
-
377
-
-
Buying Foreign Stocks
378
-
377
-
+
Regulation of the Stock Market
378
-
380
-
The Securities and Exchange Commission
379
-
380
-
-
Summary
381
-
380
-
Key Terms
381
-
380
-
Questions
381
-
381
-
Quantitative Problems
382
-
382
-
Web Exercise
382
-
383
-
-
+
Chapter 14. The Mortgage Markets
384
-
404
-
Preview
384
-
384
-
What Are Mortgages?
385
-
385
-
+
Characteristics of the Residential Mortgage
386
-
390
-
Mortgage Interest Rates
386
-
386
-
Case: The Discount Point Decision
387
-
388
-
Loan Terms
389
-
389
-
Mortgage Loan Amortization
389
-
390
-
-
+
Types of Mortgage Loans
391
-
393
-
Insured and Conventional Mortgages
391
-
391
-
Fixed- and Adjustable-Rate Mortgages
392
-
391
-
Other Types of Mortgages
391
-
393
-
-
Mortgage-Lending Institutions
394
-
394
-
+
Loan Servicing
395
-
395
-
E-Finance: Borrowers Shop the Web for Mortgages
395
-
395
-
-
Secondary Mortgage Market
396
-
396
-
+
Securitization of Mortgages
397
-
401
-
What Is a Mortgage-Backed Security?
397
-
398
-
Types of Pass-Through Securities
399
-
399
-
Subprime Mortgages and CDOs
400
-
400
-
The Real Estate Bubble
401
-
401
-
Mini-Case: Has Covid Led to a Housing Price Bubble?
401
-
401
-
-
Summary
402
-
401
-
Key Terms
402
-
402
-
Questions
403
-
402
-
Quantitative Problems
-
-
+
Chapter 15. The Foreign Exchange Market
405
-
425
-
Preview
405
-
405
-
+
Foreign Exchange Market
406
-
407
-
What Are Foreign Exchange Rates?
406
-
405
-
Why Are Exchange Rates Important?
406
-
406
-
Following the Financial News: Foreign Exchange Rates
407
-
406
-
How Is Foreign Exchange Traded?
406
-
407
-
-
+
Exchange Rates in the Long Run
408
-
411
-
Law of One Price
408
-
408
-
Theory of Purchasing Power Parity
409
-
408
-
Why the Theory of Purchasing Power Parity Cannot Fully Explain Exchange Rates
409
-
410
-
Factors That Affect Exchange Rates in the Long Run
410
-
411
-
-
+
Exchange Rates in the Short Run: A Supply and Demand Analysis
412
-
413
-
Supply Curve for Domestic Assets
413
-
413
-
Demand Curve for Domestic Assets
414
-
413
-
Equilibrium in the Foreign Exchange Market
413
-
413
-
-
+
Explaining Changes in Exchange Rates
414
-
422
-
Shifts in the Demand for Domestic Assets
415
-
417
-
Recap: Factors That Change the Exchange Rate
418
-
419
-
Case: Effect of Changes in Interest Rates on the Equilibrium Exchange Rate
420
-
420
-
Case: Brexit and the British Pound
421
-
421
-
The Practicing Manager: Profiting from Foreign Exchange Forecasts
421
-
422
-
-
Summary
423
-
422
-
Key Terms
423
-
423
-
Questions
424
-
423
-
Quantitative Problems
424
-
424
-
Web Exercises
424
-
425
-
-
+
Chapter 15. Appendix: The Interest Parity Condition
426
-
429
-
Comparing Expected Returns on Domestic and Foreign Assets
426
-
427
-
Interest Parity Condition
427
-
429
-
-
+
Chapter 16. The International Financial System
430
-
450
-
Preview
430
-
430
-
+
Intervention in the Foreign Exchange Market
431
-
433
-
Foreign Exchange Intervention and Reserves in the Banking System
431
-
431
-
Global: Variation in Central Banks’ Activism and Method of Intervention on Foreign Exchange Markets
432
-
432
-
Unsterilized Intervention
433
-
432
-
Sterilized Intervention
432
-
433
-
-
+
Balance of Payments
434
-
435
-
Global: Rising Current Account Deficits in the EU
435
-
435
-
-
+
Exchange Rate Regimes in the International Financial System
436
-
445
-
Fixed Exchange Rate Regimes
436
-
436
-
How a Fixed Exchange Rate Regime Works
437
-
438
-
The Policy Trilemma
439
-
439
-
Monetary Unions
440
-
440
-
Global: Will the Euro Survive?
441
-
440
-
Currency Boards and Dollarization
441
-
440
-
Speculative Attacks
441
-
441
-
Global: Argentina’s Currency Board
442
-
441
-
Managed Float
442
-
442
-
Global: Dollarization
443
-
442
-
Case: The Foreign Exchange Crisis of September 1992
443
-
444
-
The Practicing Manager: Profiting from a Foreign Exchange Crisis
445
-
445
-
Case: How Did China Accumulate Over $3 Trillion of International Reserves?
445
-
445
-
-
+
Capital Controls
446
-
446
-
Controls on Capital Outflows
446
-
446
-
Controls on Capital Inflows
446
-
446
-
-
+
The Role of the IMF
447
-
447
-
Should the IMF Be an International Lender of Last Resort?
447
-
447
-
-
Summary
448
-
448
-
Key Terms
449
-
448
-
Questions
449
-
449
-
Quantitative Problems
450
-
449
-
Web Exercise
449
-
450
-
-
-
+
Part Six: The Financial Institutions Industry
451
-
620
-
+
Chapter 17. Banking and the Management of Financial Institutions
451
-
476
-
Preview
451
-
451
-
+
The Bank Balance Sheet
452
-
454
-
Liabilities
452
-
453
-
Assets
453
-
454
-
-
Basic Banking
455
-
457
-
+
General Principles of Bank Management
458
-
465
-
Liquidity Management and the Role of Reserves
458
-
460
-
Asset Management
461
-
461
-
Liability Management
462
-
462
-
Capital Adequacy Management
463
-
464
-
The Practicing Manager: Strategies for Managing Bank Capital
465
-
465
-
Case: How a Capital Crunch Caused a Credit Crunch During the Global Financial Crisis
465
-
465
-
-
+
Off-Balance-Sheet Activities
466
-
468
-
Loan Sales
467
-
466
-
Generation of Fee Income
467
-
466
-
Trading Activities and Risk Management Techniques
467
-
467
-
Conflicts of Interest: Barings, Daiwa, Sumitomo, Société Générale, and JPMorgan Chase: Rogue Traders and the Principal–Agent Problem
467
-
468
-
-
+
Measuring Bank Performance
469
-
473
-
Bank’s Income Statement
469
-
470
-
Measures of Bank Performance
471
-
471
-
Recent Trends in Bank Performance Measures
471
-
473
-
-
Summary
474
-
474
-
Key Terms
475
-
474
-
Questions
475
-
474
-
Quantitative Problems
474
-
476
-
-
+
Chapter 18. Financial Regulation
477
-
508
-
Preview
477
-
477
-
+
Asymmetric Information as a Rationale for Financial Regulation
478
-
482
-
Government Safety Net
478
-
479
-
Global: The Spread of Government Deposit Insurance Throughout the World: Is This a Good Thing?
479
-
482
-
-
+
Types of Financial Regulation
483
-
496
-
Restrictions on Asset Holdings
483
-
483
-
Capital Requirements
484
-
484
-
Prompt Corrective Action
485
-
484
-
Financial Supervision: Chartering and Examination
485
-
485
-
Global: Where Is the Basel Accord Heading in a Post–Global Financial Crisis World?
486
-
486
-
Assessment of Risk Management
487
-
487
-
Disclosure Requirements
488
-
488
-
Consumer Protection
489
-
489
-
Mini-Case: Mark-to-Market Accounting and the Global Financial Crisis
490
-
489
-
Restrictions on Competition
490
-
490
-
Mini-Case: The Global Financial Crisis and Consumer Protection Regulation
491
-
491
-
Macroprudential Versus Microprudential Supervision
492
-
491
-
E-Finance: Electronic Banking: New Challenges for Bank Regulation
492
-
492
-
Summary
493
-
493
-
Global: International Financial Regulation
493
-
496
-
-
+
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
497
-
497
-
Dodd-Frank
496
-
497
-
-
+
Too-Big-to-Fail and Future Regulation
498
-
499
-
What Can Be Done About the Too-Big-to-Fail Problem?
498
-
498
-
Other Issues for Future Regulation
498
-
499
-
-
Summary
500
-
499
-
Key Terms
500
-
499
-
Questions
500
-
500
-
Quantitative Problems
501
-
501
-
Web Appendix
502
-
502
-
Chapter 18 Appendix: Banking Crises Throughout the World
502
-
508
-
-
+
Chapter 19. Banking Industry: Structure and Competition
509
-
543
-
Preview
509
-
509
-
+
Historical Development of the Banking System
510
-
511
-
Multiple Regulatory Agencies
511
-
511
-
-
+
Financial Innovation and the Growth of the Shadow Banking System
512
-
527
-
Responses to Changes in Demand Conditions: Interest Rate Volatility
513
-
513
-
Responses to Changes in Supply Conditions: Information Technology
514
-
515
-
E-Finance: Will Fintech Disrupt the Conventional Banking Sector?
516
-
516
-
E-Finance: Why Are Scandinavians So Far Ahead of Americans in Using Electronic Payments and Online Banking?
517
-
517
-
E-Finance Sweden: The Leading Cashless Society
518
-
518
-
Securitization and the Shadow Banking System
519
-
520
-
Avoidance of Existing Regulations
521
-
522
-
Mini-Case: Bruce Bent and the Money Market Mutual Fund Panic of 2008
523
-
522
-
The Practicing Manager: Profiting from a New Financial Product: A Case Study of Treasury Strips
523
-
524
-
Financial Innovation and the Decline of Traditional Banking
524
-
527
-
-
+
Structure of the U.S. Banking Industry
528
-
530
-
Restrictions on Branching
529
-
529
-
Response to Branching Restrictions
529
-
530
-
-
+
Bank Consolidation and Nationwide Banking
531
-
534
-
E-Finance: Information Technology and Bank Consolidation
533
-
532
-
The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
533
-
533
-
What Will the Structure of the U.S. Banking Industry Look Like in the Future?
534
-
533
-
Are Bank Consolidation and Nationwide Banking Good Things?
533
-
534
-
-
+
Separation of the Banking and Other Financial Service Industries
535
-
537
-
Erosion of Glass-Steagall
535
-
535
-
The Gramm-Leach-Bliley Financial Services Modernization Act of 1999: Repeal of Glass-Steagall
536
-
535
-
Implications for Financial Consolidation
536
-
536
-
Mini-Case: The Global Financial Crisis and the Demise of Large, Free-Standing Investment Banks
537
-
536
-
Separation of Banking and Other Financial Services Industries Throughout the World
536
-
537
-
-
+
Thrift Industry
538
-
538
-
Savings and Loan Associations
538
-
537
-
Mutual Savings Banks
538
-
538
-
Credit Unions
538
-
538
-
-
+
International Banking
539
-
541
-
Eurodollar Market
540
-
539
-
Structure of U.S. Banking Overseas
540
-
540
-
Foreign Banks in the United States
540
-
541
-
-
Summary
542
-
542
-
Key Terms
543
-
542
-
Questions
542
-
543
-
-
+
Chapter 20. The Mutual Fund Industry
544
-
567
-
Preview
544
-
544
-
+
The Growth of Mutual Funds
545
-
544
-
The First Mutual Funds
544
-
544
-
-
+
Benefits of Mutual Funds
545
-
547
-
Ownership of Mutual Funds
545
-
547
-
-
+
Mutual Fund Structure
548
-
550
-
Open-Versus Closed-End Funds
548
-
548
-
Case: Calculating a Mutual Fund’s Net Asset Value
549
-
549
-
Organizational Structure
549
-
550
-
-
+
Investment Objective Classes
551
-
555
-
Equity Funds
551
-
551
-
Bond Funds
552
-
552
-
Hybrid Funds
553
-
552
-
Money Market Funds
553
-
554
-
Index Funds
554
-
555
-
-
Fee Structure of Investment Funds
556
-
556
-
Regulation of Mutual Funds
557
-
557
-
+
Hedge Funds
558
-
559
-
Mini-Case: The Long Term Capital Debacle
559
-
559
-
-
+
Conflicts of Interest in the Mutual Fund Industry
560
-
563
-
Sources of Conflicts of Interest
561
-
560
-
Mutual Fund Abuses
561
-
561
-
Conflicts of Interest: Many Mutual Funds Are Caught Ignoring Ethical Standards
562
-
562
-
Government Response to Abuses
563
-
562
-
Conflicts of Interest: SEC Survey Reports Mutual Fund Abuses Widespread
562
-
563
-
-
Summary
564
-
564
-
Key Terms
565
-
564
-
Questions
565
-
564
-
Quantitative Problems
565
-
566
-
Web Exercise
566
-
567
-
-
+
Chapter 21. Insurance Companies and Pension Funds
568
-
597
-
Preview
568
-
568
-
Insurance Companies
569
-
568
-
+
Fundamentals of Insurance
569
-
571
-
Adverse Selection and Moral Hazard in Insurance
570
-
570
-
Selling Insurance
571
-
570
-
Mini-Case: Insurance Agent: The Customer’s Ally
570
-
571
-
-
Growth and Organization of Insurance Companies
572
-
571
-
+
Types of Insurance
572
-
585
-
573
-
576
-
577
-
577
-
Mini-Case: Updates to the Affordable Care Act
578
-
578
-
Property and Casualty Insurance
579
-
579
-
Mini-Case: Will Liability Issues Be a Roadblock to Driverless Cars?
580
-
580
-
Insurance Regulation
581
-
580
-
The Practicing Manager: Insurance Management
581
-
581
-
Screening
582
-
581
-
Risk-Based Premium
582
-
582
-
Restrictive Provisions
583
-
582
-
Prevention of Fraud
583
-
582
-
Cancellation of Insurance
583
-
582
-
Deductibles
583
-
582
-
Coinsurance
583
-
583
-
Limits on the Amount of Insurance
584
-
583
-
Summary
584
-
583
-
Credit Default Swaps
584
-
584
-
Conflicts of Interest: The AIG Blowup
584
-
585
-
-
+
Pensions
586
-
586
-
Conflicts of Interest: The Subprime Financial Crisis and the Monoline Insurers
585
-
586
-
-
+
Types of Pensions
587
-
591
-
Defined-Benefit Pension Plans
587
-
586
-
Defined-Contribution Pension Plans
587
-
587
-
Private and Public Pension Plans
588
-
588
-
Mini-Case: Power to the Pensions
588
-
591
-
-
+
Regulation of Pension Plans
592
-
594
-
Employee Retirement Income Security Act
592
-
593
-
Individual Retirement Plans
593
-
594
-
-
The Future of Pension Funds
595
-
594
-
Summary
595
-
594
-
Key Terms
595
-
595
-
Questions
596
-
595
-
Quantitative Problems
595
-
597
-
-
+
Chapter 22. Investment Banks, Security Brokers and Dealers, and Venture Capital Firms
598
-
620
-
Preview
598
-
598
-
+
Investment Banks
599
-
606
-
Background
599
-
599
-
Underwriting Stocks and Bonds
600
-
603
-
Equity Sales
604
-
604
-
Mergers and Acquisitions
605
-
605
-
Mini-Case: Twitter Uses Poison Pills to Drive Hard Bargain with Musk
605
-
606
-
-
+
Securities Brokers and Dealers
607
-
609
-
Brokerage Services
607
-
607
-
Mini-Case: Example of Using the Limit-Order Book
608
-
609
-
Securities Dealers
609
-
609
-
-
Regulation of Securities Firms
610
-
611
-
Relationship Between Securities Firms and Commercial Banks
612
-
611
-
+
Private Equity Investment
612
-
615
-
Venture Capital Firms
611
-
615
-
-
+
Private Equity Buyouts
616
-
616
-
Advantages to Private Equity Buyouts
616
-
616
-
Life Cycle of the Private Equity Buyout
616
-
616
-
-
Summary
617
-
617
-
Key Terms
618
-
617
-
Questions
618
-
618
-
Quantitative Problems
618
-
620
-
-
-
+
Part Seven: The Management of Financial Institutions
621
-
8
-
+
Chapter 23. Risk Management in Financial Institutions
621
-
641
-
Preview
621
-
621
-
+
Managing Credit Risk
622
-
625
-
Screening and Monitoring
622
-
622
-
Long-Term Customer Relationships
623
-
623
-
Loan Commitments
624
-
623
-
Collateral
624
-
624
-
Compensating Balances
625
-
624
-
Credit Rationing
624
-
625
-
-
+
Managing Interest-Rate Risk
626
-
637
-
Income Gap Analysis
627
-
628
-
Duration Gap Analysis
629
-
633
-
Example of a Nonbanking Financial Institution
634
-
635
-
Some Problems with Income Gap and Duration Gap Analyses
636
-
636
-
The Practicing Manager: Strategies for Managing Interest-Rate Risk
636
-
637
-
-
Summary
638
-
637
-
Key Terms
638
-
637
-
Questions
638
-
638
-
Quantitative Problems
639
-
640
-
Web Exercise
640
-
641
-
-
+
Chapter 24. Hedging with Financial Derivatives
642
-
8
-
Preview
642
-
642
-
Hedging
643
-
642
-
+
Forward Markets
643
-
644
-
Interest-Rate Forward Contracts
643
-
642
-
The Practicing Manager: Hedging Interest-Rate Risk with Forward Contracts
643
-
643
-
Pros and Cons of Forward Contracts
643
-
644
-
-
+
Financial Futures Markets
645
-
652
-
Financial Futures Contracts
645
-
645
-
Following the Financial News: Financial Futures
646
-
646
-
The Practicing Manager: Hedging with Financial Futures
647
-
648
-
Organization of Trading in Financial Futures Markets
649
-
648
-
Globalization of Financial Futures Markets
649
-
649
-
Explaining the Success of Futures Markets
650
-
651
-
Mini-Case: The Hunt Brothers and the Silver Crash
652
-
652
-
The Practicing Manager: Hedging Foreign Exchange Risk with Forward and Futures Contracts
652
-
652
-
-
Hedging Foreign Exchange Risk with Forward Contracts
653
-
653
-
Hedging Foreign Exchange Risk with Futures Contracts
654
-
653
-
+
Stock Index Futures
654
-
656
-
Stock Index Futures Contracts
655
-
654
-
Following the Financial News: Stock Index Futures
655
-
655
-
The Practicing Manager: Hedging with Stock Index Futures
655
-
656
-
-
+
Options
657
-
663
-
Option Contracts
657
-
657
-
Profits and Losses on Option and Futures Contracts
658
-
660
-
Factors Affecting the Prices of Option Premiums
661
-
661
-
Summary
662
-
661
-
The Practicing Manager: Hedging with Futures Options
661
-
663
-
-
+
Interest-Rate Swaps
664
-
666
-
Interest-Rate Swap Contracts
664
-
664
-
The Practicing Manager: Hedging with Interest-Rate Swaps
665
-
665
-
Advantages of Interest-Rate Swaps
666
-
665
-
Disadvantages of Interest-Rate Swaps
666
-
666
-
Financial Intermediaries in Interest-Rate Swaps
666
-
666
-
-
+
Credit Derivatives
667
-
669
-
Credit Options
667
-
667
-
Credit Swaps
668
-
668
-
Credit-Linked Notes
669
-
668
-
Case: Lessons from the Global Financial Crisis: When Are Financial Derivatives Likely to Be a Worldwide Time Bomb?
668
-
669
-
-
Summary
670
-
670
-
Key Terms
671
-
670
-
Questions
671
-
671
-
Quantitative Problems
672
-
673
-
Web Exercise
674
-
637
-
Web Appendix
638
-
675
-
Chapter 24 Appendix: More on Hedging with Financial Derivatives
675
-
8
-
-
-
+
Additional Chapters
9
-
747
-
+
Chapter 25. Financial Crises in Emerging Market Economies
690
-
710
-
Preview
690
-
690
-
+
Dynamics of Financial Crises in Emerging Market Economies
691
-
706
-
Stage One: Initial Phase
692
-
693
-
Stage Two: Currency Crisis
694
-
694
-
Stage Three: Full-Fledged Financial Crisis
695
-
695
-
Case: Crisis in South Korea, 1997–1998
696
-
695
-
Financial Liberalization/Globalization Mismanaged
696
-
697
-
Perversion of the Financial Liberalization/Globalization Process: Chaebols and the South Korean Crisis
698
-
698
-
Stock Market Decline and Failure of Firms Increase Uncertainty
699
-
698
-
Adverse Selection and Moral Hazard Problems Worsen and the Economy Contracts
699
-
699
-
Currency Crisis Ensues
700
-
699
-
Final Stage: Currency Crisis Triggers Full-Fledged Financial Crisis
700
-
701
-
Recovery Commences
702
-
701
-
Case: The Argentine Financial Crisis, 2001–2002
702
-
701
-
Severe Fiscal Imbalances
702
-
702
-
Adverse Selection and Moral Hazard Problems Worsen
703
-
702
-
Bank Panic Begins
703
-
702
-
Currency Crisis Ensues
703
-
704
-
Currency Crisis Triggers Full-Fledged Financial Crisis
705
-
705
-
Recovery Begins
705
-
706
-
-
+
Preventing Emerging Market Financial Crises
707
-
709
-
Beef Up Prudential Regulation and Supervision of Banks
707
-
707
-
Global: When an Advanced Economy Is Like an Emerging Market Economy: The Icelandic Financial Crisis of 2008
708
-
707
-
Encourage Disclosure and Market-Based Discipline
708
-
708
-
Limit Currency Mismatch
709
-
708
-
Sequence Financial Liberalization
708
-
709
-
-
Summary
710
-
709
-
Key Terms
710
-
709
-
Questions
709
-
710
-
-
+
Chapter 26. Savings Associations and Credit Unions
711
-
735
-
Preview
711
-
711
-
Mutual Savings Banks
712
-
712
-
+
Savings and Loan Associations
713
-
713
-
Mutual Savings Banks and Savings and Loans Compared
712
-
713
-
-
+
Savings and Loans in Trouble: The Thrift Crisis
714
-
715
-
Later Stages of the Crisis: Regulatory Forbearance
715
-
715
-
Competitive Equality in Banking Act of 1987
715
-
715
-
-
+
Political Economy of the Savings and Loan Crisis
716
-
718
-
Principal–Agent Problem for Regulators and Politicians
717
-
717
-
Case: Principal–Agent Problem in Action: Charles Keating and the Lincoln Savings and Loan Scandal
717
-
718
-
-
Savings and Loan Bailout: Financial Institutions Reform, Recovery, and Enforcement Act of 1989
719
-
720
-
+
The Savings and Loan Industry Today
721
-
724
-
Number of Institutions
721
-
720
-
S&L Size
721
-
721
-
S&L Assets
722
-
722
-
S&L Liabilities and Net Worth
723
-
722
-
Capital
723
-
722
-
Profitability and Health
723
-
723
-
The Future of the Savings and Loan Industry
723
-
724
-
-
+
Credit Unions
725
-
732
-
History and Organization
725
-
729
-
Sources of Funds
730
-
730
-
Uses of Funds
731
-
731
-
Advantages and Disadvantages of Credit Unions
732
-
732
-
The Future of Credit Unions
732
-
732
-
-
Summary
733
-
733
-
Key Terms
734
-
733
-
Questions
734
-
734
-
Exercise
734
-
735
-
-
+
Chapter 27. Finance Companies
736
-
747
-
Preview
736
-
736
-
History of Finance Companies
737
-
736
-
Purpose of Finance Companies
737
-
737
-
Risk in Finance Companies
738
-
738
-
+
Types of Finance Companies
739
-
742
-
Business (Commercial) Finance Companies
739
-
740
-
Consumer Finance Companies
741
-
742
-
Sales Finance Companies
742
-
742
-
-
Regulation of Finance Companies
743
-
743
-
+
Finance Company Balance Sheet
744
-
745
-
Assets
744
-
744
-
Liabilities
745
-
744
-
Income
745
-
745
-
Finance Company Growth
745
-
745
-
-
Summary
746
-
746
-
Key Terms
747
-
746
-
Questions
747
-
746
-
Exercise
746
-
747
-
-
-
Glossary
748
-
762
-
+
Index
763
-
788
-
A
763
-
763
-
B
764
-
764
-
C
765
-
767
-
D
768
-
768
-
E
769
-
769
-
F
770
-
772
-
G
773
-
773
-
H
774
-
774
-
I
775
-
775
-
J
776
-
775
-
K
776
-
775
-
L
776
-
776
-
M
777
-
778
-
N
779
-
779
-
O
780
-
779
-
P
780
-
780
-
Q
781
-
780
-
R
781
-
782
-
S
783
-
784
-
T
785
-
785
-
U
786
-
785
-
V
786
-
785
-
W
786
-
786
-
Y
787
-
786
-
Z
786
-
788
-
-
Guide to Commonly Used Symbols
789
-
789
Über die Autoren
Frederic Mishkin
Author
Stanley Eakins
Author
