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Chapter 10: the Economics of Banking
Terms in this set (31)
is a statement that shows an individual's or a firm's financial position on a particular day.
is something of value that an individual or a firm owns; in particular, a financial claim.
is something that an individual or a firm owes, particularly a financial claim on an individual or a firm.
is the difference between the value of a bank's assets and the
value of its liabilities; also called shareholders' equity
(or transaction deposits) are accounts against which depositors can write checks.
Federal Deposit Insurance
is a government guarantee of deposit account
balances up to $250,000.
are bank assets consisting of vault cash plus bank deposits with the
is cash on hand in a bank (including currency in ATMs and deposits with other banks).
are reserves the Fed requires banks to hold against demand deposit and NOW account balances.
are reserves banks hold above those necessary to meet reserve requirements.
is an accounting tool used to show changes in balance sheet items
Net Interest Margin
is the difference between the interest a bank receives on its securities and loans and the interest it pays on deposits and debt, divided by the total value of its earning assets.
Return on Assets (ROA)
is the ratio of the value of a bank's after-tax profit to the value of its assets.
Return of Equity (ROE)
is the ratio of the value of a bank's after-tax profit to the value of its capital.
is a measure of how much debt an investor assumes in making an investment.
is the ratio of the value of a bank's assets to the value of its capital.
is the possibility that a bank may not be able to meet its cash needs by selling assets or raising funds at a reasonable cost.
is the risk that borrowers might default on their loans.
is the process that bank loan officers use to screen loan applicants.
was formerly the interest rate banks charged on six-month loans to high-quality borrowers (now an interest rate banks charge primarily to smaller borrowers).
is the restriction of credit by lenders such that borrowers cannot obtain the funds they desire at the given interest rate.
is the effect of a change in market interest rates on a bank's profit or capital.
is an analysis of the gap between the dollar value of a bank's variable-rate assets and the dollar value of its variable-rate liabilities.
is an analysis of how sensitive a bank's capital is to changes in market interest rates.
is a federally chartered bank
Dual Banking System
is the system in the United States in which banks are chartered by either a state government or the federal government.
are activities that do not affect a bank's balance sheet because they do not increase either the bank's assets or its liabilities.
Standby Letter of Credit
is a promise by a bank to lend funds, if necessary, to a seller of commercial paper at the time that the commercial paper matures.
is an agreement by a bank to provide a borrower with a stated amount of funds during some specified period of time.
is a financial contract in which a bank agrees to sell the expected future returns from an underlying bank loan to a third party.
Trouble Asset Relief Program (TARP)
A gov program under which the US Treasury purchased stock in hundreds of banks to increase the banks capital
THIS SET IS OFTEN IN FOLDERS WITH...
Chapter 10: The Economics of Banking
Macroeconomics Chapter 11
AP Macroeconomics Module 29 - Loanable Funds
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