Financial Markets and Institutions (2-downloads)

4. Oldhat Financial started its first day of operations

with $9 million in capital. $130 million in checkable

Assets

Liabilities

Required

Reserves

$8 million

Checkable

Deposits

$100 million

Excess

Reserves

$3 million

Bank Capital

$6 million

T-bills

$45 million

Commercial

Loans

$50 million

Assets

Liabilities

Required

Reserves

$8 million

Checkable

Deposits

$100 million

Excess

Reserves

$3 million

Bank Capital

$6 million

T-bills

$45 million

Mortgages

$40 million

Commercial

Loans

$10 million

12. Do you think that eliminating or limiting the amount

of deposit insurance would be a good idea? Explain

your answer.

13. Do you think that removing the impediments to a

nationwide banking system will be beneficial to the

economy? Explain.

14. How could higher deposit insurance premiums for

banks with riskier assets benefit the economy?

15. How could market-value accounting for bank capital

requirements (discussed in the first Web appendix

to this chapter) benefit the economy? How difficult

would it be to implement?

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Chapter 18 Financial Regulation

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Banking Regulation