Financial Markets, Banking, and Monetary Policy
Edition: 1
Copyright: 2018
Pages: 470
Edition: 1
Copyright: 2018
Pages: 420
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The Great Recession of 2007-2009 had a dramatic effect on the financial markets, the banking system, and the conduct of monetary policy.
Financial Markets, Banking, and Monetary Policy takes the reader through the complexities of the credit crisis that led up to the Great Recession and its aftermath. A detailed description of the money markets, the corporate and Treasury bond markets, and the stock market, and how the financial assets in those markets are priced and traded is then provided. This text describes how the structure of the banking system had been undergoing significant changes since the early 1980s and how these changes are ongoing today. An account is given of how the Federal Reserve's unprecedented interventions in the financial markets served to quell the credit crisis and stabilize an otherwise fragile financial system, and how it must not impose an "exit strategy" to deal with the residual effects of its crisis management: a bloated balance sheet and interest rates near zero, that will take it to a "new normal."
I Overview of the Financial System
1 Introduction
1.1 The Role of Financial Markets in the Economy
1.2 Savings in the U.S. Economy
1.3 Economic Functions Performed by the Financial System
1.4 Categories of Financial Markets
1.5 Summary
1.6 Review Questions
1.7 References
2 Financial Assets
2.1 Investment Characteristics of Financial Assets
2.2 Asymmetric Information and Agency Problems
2.3 Debt Contracts versus Equity Contracts
2.4 Categorizing Financial Assets
2.5 Inflation and Asset Prices
2.6 Summary
2.7 Review Questions
2.8 References
3 Financial Institutions
3.1 The Balance Sheets of Households and Firms
3.2 The Introduction of a New Financial Asset into the Economy
3.3 Net Lenders and Net Borrowers
3.4 Sectoral Lending and Borrowing in the US Economy
3.5 Methods of Finance
3.6 Financial Institutions
3.7 Summary
3.8 Review Questions
3.9 References
4 The Financial Crisis and the 2007-2009 Great Recession
4.1 A First Look at the Financial Crisis and the Great Recession
4.2 The Changing Nature of Financial Institutions
4.3 The Financial Crisis Unfolds
4.4 Troubled Asset Relief Program (TARP)
4.5 The Path to Normalcy in a New Regulatory Environment
4.6 Recent Updates to Dodd-Frank
4.7 Summary
4.8 Appendix: Consumer Financial Protection Bureau: “Ability-to-Repay”
4.9 Review Questions
4.10 References
II Asset Pricing and Financial Markets
5 Money Market Interest Rates and Corporate Bonds
5.1 Money Market Interest Rates
5.2 Present and Future Value Calculations
5.3 Corporate Bond Pricing
5.4 The Primary Market for Corporate Bonds
5.5 The Secondary Market for Bonds
5.6 Credit Rating Agencies
5.7 Daily Information on Bond Trading
5.8 Exercises Based on Table 5.2
5.9 Summary
5.10 Review Questions
5.11 References
6 Corporate Stock
6.1 Short-Selling
6.2 Organized Stock Exchanges
6.3 Over-the-Counter (OTC) Stock Markets
6.4 Listing Requirements
6.5 Stock Valuations
6.6 Analyzing Information Reported in the Financial Press
6.7 Sources of Funds for Long-Term Growth
6.8 Stock Buybacks
6.9 Inflation Scares on Wall Street
6.10 Summary
6.11 Review Questions
6.12 References
7 The Money Markets
7.1 Money Market Mutual Funds (MMMFs)
7.2 Treasury Bills
7.3 Commercial Paper
7.4 Large Negotiable Certificates of Deposit (CDs)
7.5 Repurchase Agreements (Repos or RPs)
7.6 Banker’s Acceptances
7.7 Summary
7.8 Review Questions
7.9 References
8 The U.S. Treasury Market
8.1 Historical Background
8.2 Composition of U.S. Treasury Debt
8.3 “On-the-Run” Treasurys
8.4 Trading U.S. Government Securities
8.5 Treasury Inflation Protection Securities (TIPS)
8.6 Primary Market for U.S. Treasurys
8.7 The Term Structure of Interest Rates
8.8 The Treasury Yield Curve
8.9 Summary
8.10 Review Questions
III Financial Institutions
9 The Banking System
9.1 Bank Structure
9.2 Bank Liabilities
9.3 Bank Assets
9.4 Bank Equity Capital
9.5 The Basel Accords
9.6 Summary
9.7 Review Questions
9.8 References
10 The Federal Reserve
10.1 The Origin of the Federal Reserve and its Mandate
10.2 The Structure and Organization of the Federal Reserve
10.3 Policy-Making Committees
10.4 The Dual Policy Mandate: Price Stability
10.5 The Dual Policy Mandate: Maximum Sustainable Employment
10.6 The Federal Reserve’s Balance Sheet
10.7 Implementing Monetary Policy
10.8 Setting the Interest Rate
10.9 The Federal Reserve’s Response to the Financial Crisis
10.10 The Federal Reserve Today
10.11 Summary
10.12 Review Questions
10.13 References
11 Subject Index
12 Author Index
13 Bibliography
The Great Recession of 2007-2009 had a dramatic effect on the financial markets, the banking system, and the conduct of monetary policy.
Financial Markets, Banking, and Monetary Policy takes the reader through the complexities of the credit crisis that led up to the Great Recession and its aftermath. A detailed description of the money markets, the corporate and Treasury bond markets, and the stock market, and how the financial assets in those markets are priced and traded is then provided. This text describes how the structure of the banking system had been undergoing significant changes since the early 1980s and how these changes are ongoing today. An account is given of how the Federal Reserve's unprecedented interventions in the financial markets served to quell the credit crisis and stabilize an otherwise fragile financial system, and how it must not impose an "exit strategy" to deal with the residual effects of its crisis management: a bloated balance sheet and interest rates near zero, that will take it to a "new normal."
I Overview of the Financial System
1 Introduction
1.1 The Role of Financial Markets in the Economy
1.2 Savings in the U.S. Economy
1.3 Economic Functions Performed by the Financial System
1.4 Categories of Financial Markets
1.5 Summary
1.6 Review Questions
1.7 References
2 Financial Assets
2.1 Investment Characteristics of Financial Assets
2.2 Asymmetric Information and Agency Problems
2.3 Debt Contracts versus Equity Contracts
2.4 Categorizing Financial Assets
2.5 Inflation and Asset Prices
2.6 Summary
2.7 Review Questions
2.8 References
3 Financial Institutions
3.1 The Balance Sheets of Households and Firms
3.2 The Introduction of a New Financial Asset into the Economy
3.3 Net Lenders and Net Borrowers
3.4 Sectoral Lending and Borrowing in the US Economy
3.5 Methods of Finance
3.6 Financial Institutions
3.7 Summary
3.8 Review Questions
3.9 References
4 The Financial Crisis and the 2007-2009 Great Recession
4.1 A First Look at the Financial Crisis and the Great Recession
4.2 The Changing Nature of Financial Institutions
4.3 The Financial Crisis Unfolds
4.4 Troubled Asset Relief Program (TARP)
4.5 The Path to Normalcy in a New Regulatory Environment
4.6 Recent Updates to Dodd-Frank
4.7 Summary
4.8 Appendix: Consumer Financial Protection Bureau: “Ability-to-Repay”
4.9 Review Questions
4.10 References
II Asset Pricing and Financial Markets
5 Money Market Interest Rates and Corporate Bonds
5.1 Money Market Interest Rates
5.2 Present and Future Value Calculations
5.3 Corporate Bond Pricing
5.4 The Primary Market for Corporate Bonds
5.5 The Secondary Market for Bonds
5.6 Credit Rating Agencies
5.7 Daily Information on Bond Trading
5.8 Exercises Based on Table 5.2
5.9 Summary
5.10 Review Questions
5.11 References
6 Corporate Stock
6.1 Short-Selling
6.2 Organized Stock Exchanges
6.3 Over-the-Counter (OTC) Stock Markets
6.4 Listing Requirements
6.5 Stock Valuations
6.6 Analyzing Information Reported in the Financial Press
6.7 Sources of Funds for Long-Term Growth
6.8 Stock Buybacks
6.9 Inflation Scares on Wall Street
6.10 Summary
6.11 Review Questions
6.12 References
7 The Money Markets
7.1 Money Market Mutual Funds (MMMFs)
7.2 Treasury Bills
7.3 Commercial Paper
7.4 Large Negotiable Certificates of Deposit (CDs)
7.5 Repurchase Agreements (Repos or RPs)
7.6 Banker’s Acceptances
7.7 Summary
7.8 Review Questions
7.9 References
8 The U.S. Treasury Market
8.1 Historical Background
8.2 Composition of U.S. Treasury Debt
8.3 “On-the-Run” Treasurys
8.4 Trading U.S. Government Securities
8.5 Treasury Inflation Protection Securities (TIPS)
8.6 Primary Market for U.S. Treasurys
8.7 The Term Structure of Interest Rates
8.8 The Treasury Yield Curve
8.9 Summary
8.10 Review Questions
III Financial Institutions
9 The Banking System
9.1 Bank Structure
9.2 Bank Liabilities
9.3 Bank Assets
9.4 Bank Equity Capital
9.5 The Basel Accords
9.6 Summary
9.7 Review Questions
9.8 References
10 The Federal Reserve
10.1 The Origin of the Federal Reserve and its Mandate
10.2 The Structure and Organization of the Federal Reserve
10.3 Policy-Making Committees
10.4 The Dual Policy Mandate: Price Stability
10.5 The Dual Policy Mandate: Maximum Sustainable Employment
10.6 The Federal Reserve’s Balance Sheet
10.7 Implementing Monetary Policy
10.8 Setting the Interest Rate
10.9 The Federal Reserve’s Response to the Financial Crisis
10.10 The Federal Reserve Today
10.11 Summary
10.12 Review Questions
10.13 References
11 Subject Index
12 Author Index
13 Bibliography