The Economics of Banking [Paperback]

Economics of Banking is aimed at final year undergraduate, postgraduate and MBA students taking courses in banking. The text focuses on banking trends and operations in a microeconomic context, incorporating theoretical material with practical aspects of banking.

Preface xi

Chapter 1 : Trends in Domestic and International Banking 1

1.1 Introduction 1

1.2 Deregulation 3

1.3 Financial Innovation 4

1.4 Globalization 6

1.5 Profitability 8

1.6 The Future 16

1.7 Conclusion 19

1.8 Summary 19

Questions 20

Test Questions 21

Chapter 2 : Financial Intermediation: The Impact of the Capital Market 23

2.1 Introduction 23

2.2 The Role of the Capital Market 24

2.3 Determination of the Market Rate of Interest 30

2.4 Summary 34

Questions 35

Test Questions 35

Chapter 3 : Banks and Financial Intermediation 37

3.1 Introduction 37

3.2 Different Requirements of Borrowers and Lenders 38

3.3 Transaction Costs 40

3.4 Liquidity Insurance 43

3.5 Asymmetry of Information 46

3.6 Operation of the Payments Mechanism 51

3.7 Direct Borrowing from the Capital Market 51

3.8 Conclusion 52

3.9 Summary 53

Questions 53

Test Questions 53

Chapter 4 : Banking Typology 55

4.1 Introduction 55

4.2 General Features of Banking 56

4.3 Retail Banking 59