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A short course of lectures

Promotion of fair and healthy competitionMonetary banking institutionsScreeningCentral bank moneyPillar 3: market discipline (promotes greater stability in the financial system)Money creation is not dependent on a cash reserve requirementReserve requirementBibliographyEfficient allocation of fundsGeneral principlesInformation costsPrinciples of banking Reputation riskIslamic banksEconomies of scaleNotes and coins depositedBasic raison d'être for banks: information costs and liquidity Compensating balances and monitoring of business transactionsAsymmetry in liquidity preferenceThe moral hazard problemActive secondary financial marketsEnhanced liquidityCounterparty riskLiquidity riskSpecialisation in lendingLoan commitmentsMicro-credit banksLearning outcomesCollateral requirementBalance sheet changes resulting from deposit withdrawals and drawdowns on loan facilitiesBasel accordsBank models & prudential requirementsHuman resources riskLarge exposuresCredit derivativesFinancial instrumentsDefinitionBanking statute returns in respect of credit riskImpeccable recordOTC versus securities marketsBibliographySystemic malfunctionInterest rate riskDevelopment banksTrading banksThe banking statute: prudential requirementsLiquid assetsManagement of interest rate riskBibliographyConsumer confidence and consumer demand for regulationPromotion of financial stabilityIdeal and extreme portfoliosThe financial system Efficiency-related principlesLiability and asset portfolio managementPrudential requirementsShare capital (equity)How does a central bank maintain a bank liquidity shortage?Rationale for regulationIs "money supply" a misnomer?Duration analysisOperational riskLoansStability-related principlesDeposit insuranceUniqueness of banksExternal riskDefinitionMoney creation starts with a bank loanObjectives of regulationMoney and its roleDefinitionThe banking statute: generalMutual banks / building societiesPromotion of consumer protectionImproved diversificationMoney creationFinancial intermediariesCompliance riskThe banking statute: other requirements associated with risk managementCommercial banksAsymmetric information, adverse selection and moral hazardBank modelsBroad functions of banksMarket riskThe money identity and the creation of moneySovereign credit riskGovernment spendsFundamental issues in bankingConflict-conciliatory principlesOff-balance sheet activities Basel IIIWhat is money?Legal and documentation riskAssets ReturnsLearning outcomesAvoidanceDiscount housesLoansPrice risk lessened for the ultimate lenderPrice discoveryInterest rate repricing gap analysisCo-operative banksLenders and borrowersConditions for creation of liquidity Private banksCurrency riskMoney creationRationale, objectives & principles of regulation Liabilities BibliographyLearning objectivesShare capital and unimpaired reserve fundOff-balance-sheet activities that carry no or little riskThe balance sheet of a bankThe concept of riskBasel II Dedicated banksLearning outcomesPillar 1: minimum capital requirementMeasures of a bank's liquidity exposureCredit rationingEssence of bankingPrinciples of regulationRisk in bankingDiversificationThe central bank and the bank runManagement of credit riskMonitoringRegulatory-structure principlesPillar 2: supervisory review (regulatory response to Pillar 1)Financial marketsSupplier demand for regulationInformation technology systems riskFacilitation of flow of fundsThe cash reserve requirementRole of the central bank in money creationLong-term relationship buildingMerchant and investment banksRealityBank liquidity and a "bank run"Payments systemMoney creationMonetary policy functionAssistance in price discoveryAllied participants on the financial systemVolume of and the type of liquid assetsMoney creationCredit riskOff-balance-sheet activities that carry riskEconomies of scaleMarket imperfectionsMeasures of moneyMoney creation does not start with a bank receiving a depositDeposits
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