Key Questions and Issues
for In-Class Discussion
and for Exam Review
Money, Banking, and Financial Institutions
(Keyed to Mishkin, Business School Edition, 2nd Ed 2010)
- Last Updated: 28 March 2015
- Latest Course Offering: Spring Semester 2011
- Course Instructor:
- Professor Leigh Tesfatsion
tesfatsi AT iastate.edu
- Online Econ 353 Syllabus:
Mishkin Chapter 1 ("Why Study Money, Banking, and Financial
Key In-Class Discussion Questions (M1):
- (Mishkin Chapter 1) Why study money money, banking, and financial markets -- what's in it for you?
- (Web Browse Question) What are some of the key events in U.S. history thought to be
important for the development of the U.S. financial sector?
- (Mishkin Chapter 1) How has the U.S. economy performed since 1950, as
measured by key macro variables such as GDP, inflation, and unemployment?
What's the current situation?
- (Web Browse Question) Why have stock prices exhibited so much volatility since 1950 (and what does
- (Web Browse Question) What's the latest scoop on the financial crisis? Have financial markets fully recovered?
- (Web Browse Question) Have technological changes introduced into the U.S.
economy since 1950 been evolutionary or revolutionary?
- (Web Browse Question) What's currently going on with the major trading
partners of the the U.S? For example, what's going on in the European
Union? in Japan? in Argentina? in Canada? in China? in India?
- Key Issues (M1):
- Effects of money, banking, and financial markets on everyday life and
on the longer-run well being of nations
- U.S. historical events affecting development of financial sector
- Properties of key U.S. economy time series since 1950
Mishkin Chapter 2 ("Overview of the Financial System"): Part A
Key In-Class Discussion Questions (M2-A):
- What's an "asset"? What's a "real asset"? What's a "financial asset"?
- Why are financial assets important to an economy? What role do they
- In what ways, if any, are financial firms (firms that transact in
financial assets) special in comparison to firms that transact in
- How are unit prices of real assets determined? For example, how is
the unit price determined for a whopper hamburger at the Ames Burger King
restaurant? for sweet corn
at the North Grand Mall farmer's market? for a car at Toyota-Mazda of
a home listed for sale by the Ames Hunziker real estate agency?
- Do financial assets require different kinds of pricing mechanisms than
real assets? Would you be surprised to see a HyVee stock share store?
A New York Shoe Exchange listed in the Wall Street Journal? Why or why
- Can you buy financial assets locally in Ames? If so, what type, and
- How is a stock broker not like a bank? How is a Nasdaq stock dealer not
like a stock broker? More generally, what are the general defining
characteristics that distinguish brokers, dealers, investment bankers,
and financial intermediaries from each other? How does each type of
agent make its profits? Have you ever dealt with these kinds of agents?
- What (if anything) do financial intermediaries such as banks do for an
economy that brokers and dealers can't do (or can't do as well)? What
(if anything) do brokers and dealers do for an economy that financial
intermediaries can't do (or can't do as well)?
- What are the key defining characteristics of auction markets,
over-the-counter markets, organized exchanges, and intermediation
financial markets? Which, if any, of these types of markets have you
- (Web Browse Question) Will traditional financial players and markets ultimately be replaced
by automated financial Internet markets (e.g., Electronic
Communication Networks) in which computational agents ("pricebots" and
"shopbots") are used by would-be sellers and buyers of financial assets
to determine the "best" possible matching orders?
- (Web Browse Question) What are the most common forms of student loans? What are the
eligibility requirements? Payment enforcement mechanisms? Default rates?
- Key Issues (M2-A):
- The Economy as a Circular Flow (Hand-Out)
- Financial versus Real Assets
- Basic Functions of Financial Markets
- Types of Players in Financial Markets
- Types of Financial Market Structures
- Relative Advantages/Disadvantages of FIs
Mishkin Chapter 2 ("Overview of the Financial System"): Part B
Key In-Class Discussion Questions (M2-B):
- What't the difference between "financial exchange" and instances of
- What's the distinction between "direct finance" and "indirect finance"
all about? Why might it be important to an economy to have both types of
- What's the difference between a primary market and a secondary
What are some concrete examples of each? Have you participated in
these types of markets? Which ones?
- What are the key distinctions between "debt" and "equity"? If a firm
goes bankrupt, would you rather be a holder of the firm's debt or a
holder of the firm's equity (stock shares)?
- What's the difference between common stock and preferred stock? If a
firm goes bankrupt, would you rather be a holder of the firm's preferred
stock or a holder of the firm's common stock?
- What's the difference between a "money market" and a "capital market"?
Which type of market do you think would be a better
place to store savings in today's economy?
- How are financial markets becoming increasingly global in nature?
- Who regulates financial markets? And why?
- (Web Browse Question) What's the real story about the U.S. "Free Banking Era" (1837-1863)? What
does "free banking" mean? Does this historical period provide support for federal regulation of banking?
- Key Issues (M2-B):
- Six Basic Functions of Financial Markets
- Distinctions Among Securities Markets by Asset Characteristics
- Asymmetric Information Problems in Financial Markets
- Financial Regulation
Mishkin Chapter 3 ("What is Money?")
Key In-Class Discussion Questions (M3):
- What is "money"? If you were to travel to a newly discovered
civilization deep in the Amazon jungle, how could you tell whether or not
the people had an economy based on money?
- What does money do for an economy? Do we really need a monetary payment
system? What would be so bad about simply having a
barter payment system (goods for goods)?
- (Web Browse Question) What kinds of money were in use in the thirteen
colonies at the time of
the American Revolution? How did Britain finance its war efforts? How
did the colonies finance their war efforts?
- (Web Browse Question) What kinds of money were in use in the United States at
the time of the
outbreak of the U.S. Civil War? How did the north finance its war
efforts? How did the south finance its war efforts?
- What kinds of money are in use in the U.S. today?
- What kinds of money do you think might be in use in the U.S. in the year
- What is "monetary policy"? Why do U.S. monetary policy makers worry about
being able to accurately measure and control the money supply?
- How is the money supply actually measured in the U.S.?
- (Web Browse Question) What new forms of financial assets have been developed in the U.S.
over the past twenty years? Have these new forms made the measurement of money easier or more difficult?
- Key Issues (M3):
- The Definition (Abstract Meaning) of Money
- Types of Money
- Functions of Money
- Evolution of Payment Systems
- Efficiency of Barter vs. Monetary Payment Systems
- Difficulties Encountered in Attempts to Measure the Money Supply
- Measuring the Money Supply: Actual Practice in the U.S.
- Reliability of U.S. Monetary Data
Mishkin Chapter 4 ("Understanding Interest Rates"): Part A
Key In-Class Discussion Questions (M4-A):
- Have you ever taken out a loan? What type? Under what conditions?
- What are "simple loans"? "fixed payment loans"? "coupon bonds"? "discount
bonds" (or "zero-coupon bonds") ? What are some every-day examples of
these financial assets? Have you ever transacted in these kinds of
- Isn't a dollar just a dollar, regardless of when
earned? Why can't I
simply calculate my expected wealth by adding up the income I expect to
earn over the coming years?
- Why is "present value" considered to be one of the most important
concepts ever articulated in financial economics? What would finance
be like without this concept?
- As a practical matter, how do you calculate the present value of a single
future payment? two future payments received on separate dates? an
arbitrary future payment stream?
- Why is the "yield to maturity" considered to be the most
interest rate measure for financial assets? What kind of information about
a financial asset does it convey?
- How do you calculate the yield to maturity for a simple loan? a fixed
payment loan? a coupon bond? a discount bond? an arbitrary financial
asset? How is it that a discount bond, which makes NO coupon
payments by definition, nevertheless generally has a POSITIVE yield to
- What's a simple trick for remembering the important
the purchase price of coupon bond, its face value, its coupon rate, and
its yield to maturity?
- Why is it true that, all else equal, a higher yield to maturity for a
bond corresponds to a lower purchase price for the bond?
- Key Issues (M4-A):
- Diagrammatic representation of a simple loan contract
- Diagrammatic representation of a fixed-payment loan contract
- Diagrammatic representation of a coupon bond
- Diagrammatic representation of a discount bond
- Present value of a future payment
- Present value of a stream of future payments
- General formula for determining the yield to maturity for any bond
- Calculating the yield to maturity for a simple loan
- Calculating the yield to maturity for a fixed-payment loan
- Calculating the yield to maturity for a coupon bond
- Calculating the yield to maturity for a discount bond
- Inverse relationship between the price of a bond and its yield to maturity
- Relationships among the purchase price, face value,
yield to maturity, and coupon rate for a coupon bond.
Mishkin Chapter 4 ("Understanding Interest Rates"): Part B
Key In-Class Discussion Questions (M4-B):
- Why should we care about other measures of interest rates, such as the
current yield and the discount yield?
- How can we make sense out of the bond pages appearing in financial
sections of newspapers such as the Wall Street Journal and the New York
Times? How do these bond pages make use of the current yield,
the discount yield, and other concepts and
relationships taken up by Mishkin in Chapter 4?
- Why do smart investors need to understand the distinction
interest rate and the more comprehensive conception of a "return rate"?
What is this distinction?
- Why do smart investors need to distinguish carefully between nominal and
real interest rates (and similary for return rates)? What is this
distinction between "nominal" and "real"?
- What is "interest rate risk" and whose risk are we talking
- Key Issues (M4-B):
- Calculating the current yield for a consol bond
- For a coupon bond:
- How does its maturity affect the relationship between
its current yield and its yield to maturity?
- What is the relationship between its current yield,
its COUPON RATE, its purchase price, and its face value?
- What is the relationship between its current yield,
its YIELD TO MATURITY, its purchase price, and its face value?
- What is the relationship between its current yield
and its purchase price, given any fixed level for its coupon payment?
- All else remaining the same, why do its current yield
and its yield to maturity always move together?
- For a discount bond, all else remaining the same, why do its discount
yield and its yield to maturity always move together?
- How to read financial bond pages for information on Treasury bonds
and notes, Treasury bills, and corporate bonds traded on stock
- Why is the return rate on a bond not necessarily equal to its interest
- For a coupon bond, when is its return rate equal to its current yield?
Its return rate equal to its yield to maturity?
- How does the maturity of a bond affect its interest rate risk?
- Why do bonds with long maturities expose bond holders to greater
interest rate risk than bonds with shorter maturities?
- What is the relationship between real and nominal interest rates?
- Why do real interest rates provide a more accurate measure of the true
costs of borrowing and the true gains from lending than nominal interest
- Why do real return rates provide a more accurate measure of the true
gains or losses from holding an asset than nominal return rates?
Mishkin Chapter 5 ("The Behavior of Interest Rates")
Key In-Class Discussion Questions (M5):
- How can the standard demand and supply curve analysis from
Principles of Micro 101 be applied to bond markets to determine
equilibrium bond prices and interest rates?
- What kinds of factors cause movements along the demand and supply
- What kinds of factors cause shifting of the demand and supply
- How is the equilibrium bond price (interest rate) affected by these
- In what sense is the analysis "short run"?
- (Web Browse Question) Can we approach the modeling of financial markets in a
more dynamic way?
(Most definitely yes! For example, we can grow financial markets "from
the bottom up." Take a look
at some exciting new developments along these lines reported on at
- Key Issues (M5):
- Factors causing movements along the bond demand curve
- Factors causing the bond demand curve to shift
- Factors causing movements along the bond supply curve
- Factors causing the bond supply curve to shift
- Predicted movements in the price of bonds in response to an
excess demand or supply of bonds
- Predicted effects on bond market equilibrium of changes
in various factors such as wealth, expected interest rates,
expected inflation, and the government deficit
- Relationship between bond market analysis and loanable funds market
- Predicted movements in the interest rate on bonds in response to
an excess demand or supply of loanable funds
- In what sense is the demand and supply analysis in Mishkin (Chapter 5)
partial equilibrium in nature? In particular, why must his caution
"all other economic variables are held constant" given at the
beginning of Chapter 5 always be kept in mind when considering
the practical application of the predictions he obtains from his
demand and supply analysis of the bond market?
Mishkin Chapter 7: Part A ("Stock Market Pricing")
Key In-Class Discussion Questions (M7-A):
- What distinguishes fundamental from behavioral models of stock market
- Form and interpretation of the one-period common stock valuation model
and its multiple period generalization
- Are price bubbles ruled out by the one-period stock valuation model? by
the generalized model?
- Under what conditions does the Gordon Growth Model make empirical sense?
- Applications of the Gordon Growth Model (9/11, Enron scandals, monetary
- What kinds of information are provided in the stock pages appearing in
financial sections of newspapers such as the Wall Street Journal and the
New York Times? How does it compare with the kinds of stock information
provided on-line, e.g., at cnn.com?
- Key Issues (M7-A):
- Basic assumptions underlying fundamental models of stock market pricing
- Basic assumptions underlying behavioral models of stock market pricing
- Specific assumptions underlying the one-period stock valuation model
- Definition of a "price bubble"
- Specific assumptions underlying the generalized (infinite horizon) stock valuation model
- Specific assumptions underlying the Gordon Growth Model
- How to read stock pages in the financial sections of newspapers
Mishkin Chapter 7: Part B ("Rational Expectations and the Efficient Market Hypothesis")
Key In-Class Discussion Questions (M7-B):
- How do economists model the way investors form their expectations?
- How do "adaptive" expectations differ from "rational" expectations?
- What is the "Efficient Market Hypothesis (EMH)"?
- Empirical evidence for and against the EMH in stock markets?
- Does the EMH provide practical advice for investing in the stock market?
- Key Issues (M7-B):
- Definition for "adaptive expectations"
- Definition(s) for "rational expectations"
- Various forms of the Efficient Market Hypothesis (EMH)
- Empirical evidence relating to the EMH
Mishkin Chapter 20 ("Foreign Exchange Market")
Key In-Class Discussion Questions (M20):
- Why is "arbitrage" (i.e., the seeking
out and exploitation of ways to make money through the buying and selling
of an asset at two different prices) thought to be such a powerful
organizing principle for thinking about financial transactions?
- In what sense is the "Purchasing Power Parity" (PPP) condition based on
arbitrage principles? What are its strengths and weaknesses as a
predictive tool for exchange rates? How about its use as a means of
obtaining international cross-country data comparisons?
- What about the "interest parity" condition? Is this arbitrage condition
based on firmer footing than the PPP condition? Why or why not?
- (Web Browse Question) What is the European Union, and what are the potential advantages and
disadvantages of joining the European Union?
- (Web Browse Question) What is the eurozone, and what are the potential advantages and disadvantages of joining
- Key Issues (M20):
- "Law of one price" motivation for PPP condition
- Empirical evidence for and against PPP condition
- Key possible explanations for empirical problems with the PPP condition
- Arbitrage opportunities arising purely from changes in real exchange rates
- Motivation for the interest parity condition in real or nominal form
- In what sense does the interest parity condition express the absence
of unexploited profit opportunities associated with international
- Empirical support for the interest parity condition
- History, structure and operation (including membership requirements), current members,
and potential members of the European Union and the eurozone.
Mishkin Chapter 21 ("International Financial System")
Key In-Class Discussion Questions (M21):
- Why worry about international accounts?
- How is national income accounting done for open economies?
- How does "ROW savings" figure into national income accounting for open
- How do countries keep track of the flows of currencies across their
borders through "balance of payment" accounts?
- In the US (post-1999), how are these accounts separated into current, capital, and financial accounts?
- Why is there so much confusion between the balance of payments accounting identity and the balance of payments equilibrium condition?
- What is a "current account deficit"? What is a "balance
of payments deficit"? What does balance of payments "equilibrium" mean for a country?
- How bad is it for a country to maintain a persistent current account deficit? A persistent balance of payments deficit?
- (Web Browse Question) Which countries currently have major balance of payments deficit problems, and why?
- (Web Browse Question) What is the official role of the International Monetary Fund (IMF) with regard to balance of payments problems?
- (Web Browse Question) Why are so many people now calling for major reform or even abolishment of the IMF?
- Key Issues (M21):
- Inclusion in the current account of net investment income
from both real and financial assets
- Re-expression of the standard national income accounting identity
Y=C+I+G+NE into Saving=Investment form
- Connection between the HC current account and ROW saving
- Relationship between the HC current account, HC national
saving, and HC total investment
- HC current account surplus (deficit) as a measure of HC net lending to (borrowing from) ROW
- Treatment of official reserve asset transactions within the balance of payment accounts
- Importance of distinguishing carefully between the balance of payments accounting identity (which always holds by definition) and balance of payments equilibrium (which may or may not hold at any given time)
- Difficulties in practice associated with attempts to sustain a
persistent BP deficit or surplus
- Difficulties with BP equilibrium as a policy objective
- BP equilibrium (external balance) with a fixed nominal exchange rate
- BP equilibrium (external balance) with a flexible nominal exchange rate
- History, structure and operation (including membership requirements), current objectives,
and current membership of the IMF
- Protests challenging the role of the IMF in the world today.
Mishkin Chapter 8 ("Financial Structure")
Key In-Class Discussion Questions (M8):
- According to Mishkin, what are the basic "stylized facts" characterizing the current U.S. financial system?
- Mishkin argues that many of the structural aspects of the U.S. financial system can be explained in terms of transactions costs and asymmetric information problems. What are his arguments? Are they convincing?
- (Web Browse Question) In what ways, if any, are Mishkin's concerns about asymmetric information problems in securities markets exemplified by the Enron bankruptcy scandal? by the Global Subprime Financial Crisis?
- Key Issues (M8):
- Eight puzzles regarding real-world U.S. financial structure
- What are the advantages and disadvantages for U.S. corporations
of using stock issue as a source of external finance?
- What are the advantages and disadvantages for U.S. corporations
of using bond issue as a source of external finance.?
- What are the advantages and disadvantages for U.S. corporations
of using INDIRECT finance as a source of external finance?
- What are the advantages and disadvantages for U.S. corporations
of using banks in particular as a source of external finance?
- Why is the U.S. financial sector so heavily regulated?
- Why do larger firms tend to have easier access to U.S. securities
markets for external finance?
- Why is collateral such a prevalent feature of U.S. debt contracts?
- Why are U.S. debt contracts so complicated and full of restrictive
- How do transaction costs help to explain puzzle 3?
- How does adverse selection help to explain puzzles 1 through 7?
- How does moral hazard help to explain puzzles 1-5 and 7-8?
Mishkin Chapter 9 ("Financial Crises and the Subprime Meltdown
Key In-Class Discussion Questions (M9):
- (Web Browse Question) What happened to the U.S. financial sector during the Great Depression? During the 1980s savings and loan crisis?
During the 2007-2011 Subprime Financial Crisis?
- (Web Browse Question) What has been the root cause and progression of recent financial crises in other parts of the world (Thailand, Malaysia, South Korea,Indonesia, Japan, Russia, Brazil, Mexico, Argentina, ...)?
- Does Mishkin succeed in providing a credible **theory** of
financial crises for developed economies such as the U.S.?
For emerging economies such as Mexico?
- What is the feasibility and/or desirability of having an
institutionalized global safety net?
- Key Issues (M9):
- How do poorly functioning financial markets hurt economic
growth and development?
- Under what conditions do financial markets tend to function poorly?
- Are financial crises largely caused by information problems?
- How can interest rate increases trigger or worsen adverse
- How can increases in lender uncertainty trigger or worsen
- How can net worth declines trigger or worsen financial crises?
- How can stock market declines cause net worth to decline?
- How can inflation rate declines cause net worth to decline?
- How can exchange rate changes cause net worth to decline?
- How can interest rate increases cause net worth to decline?
- How can bank panics trigger or worsen financial crises?
- According to Mishkin, what has been the typical sequence of events for U.S. financial crises?
- What happened in the U.S. during the Great Depression (1929-1939)?
- What happened in the U.S. during the 2007-2011 Subprime Financial Crisis?
- Why do aggregate price level declines result in increased debt burdens?
- How can debt deflation trigger or worsen financial crises?
- Why is it important to distinguish between cash flow
(liquidity) problems and insolvency?
- According to Mishkin, what has been the typical sequence of events for financial crises in emerging market countries?
- What happened during the 1994--1995 Mexican financial crisis?
- How was Mexico assisted out of its financial crisis?
- What controversies have arisen regarding this assistance to Mexico?
- How does the 1994-1995 Mexican financial crisis compare and contrast with the financial crises in East Asia (1997-1998) and Argentina (2001-2002)?
- What kinds of proposals have been made regarding the institution of a global safety net?
- What are the potential advantages and disadvantages of these proposals?
Mishkin Chapter 10 ("Banking...")
Key In-Class Discussion Questions (M10):
- Traditional banking -- is it going the way of the vinyl record?
- What problems might arise as banks increasingly engage in
off-balance-sheet activities? (Think Enron)
- Do banks really need to be so cautious that they end up only lending to those who don't really need the money?
- (Web Browse Question) What are the potential benefits and pit-falls
of the non-traditional "small banking" (microcredit) approach
pioneered by the Grameen Bank (Bangladesh)?
- Key Issues (M10):
- What are the primary sources of bank funds in the U.S. today?
- What are the primary uses of bank funds in the U.S. today?
- What kinds of moral hazard problems can arise between banks and their borrowers?
- What kinds of moral hazard problems can arise between banks and their depositors?
- What kinds of moral hazard problems can arise between banks and their regulators?
- Why does the existence of off-balance-sheet activities tend to worsen moral hazard problems between banks and their depositors and regulators?
Mishkin Chapter 11/12 ("U.S. Banking...): Part A
Key In-Class Discussion Questions (M11/12-A):
- How does the structure of the U.S. banking system compare with those of other countries?
- How have the issues of big government vs. minimal government, and
national vs. states' rights, driven the history of banking in the U.S.?
- Key U.S. banking legislation -- what effects have these acts had on
the evolution of the U.S. banking system?
- How, in particular, did the financial collapse that occurred
in the early years of the U.S. Great Depression affect the form
of financial regulation in the U.S. in subsequent years?
- (Web Browse Question) What is the 1999 Gramm-Leach-Bliley act
- (Web Browse Question) What is the 2011 Dodd-Frank Wall
Street Reform and Consumer Protection Act all about?
- (Web Browse Question) How independent is the Fed (the U.S. central bank) from the U.S. executive branch? How much *institutional* power (versus personal power) does the Fed Chairman actually have?
- Is it necessarily a good thing to have a central bank independent of the executive branch of government?
- Key Issues (M11/12-A):
- What are the key empirical facts characterizing U.S. banking today?
- What are the key ways in which U.S. banking differs from banking abroad?
- What key historical events led to a dual banking system in the U.S.?
- What are the key provisions of the Federal Reserve Act of 1913?
In particular, how did this act structure the U.S. central bank (the
Federal Reserve system)?
- What are the key provisions of the Banking Act of 1933
- What arguments have been given for and against the
banking and securities activities in the U.S., as imposed by
the 1933 Glass-Steagall Act?
- Why are the advantages and disadvantages of bank branching restrictions?
- What kinds of branching restrictions were imposed on U.S. banks
- What are the key provisions of the 1994 Riegle-Neal Interstate Banking and Branching Efficiency Act?
- To what extent were the provisions of the 1933 Glass-Steagall
act significantly weakened by the November 1999
- Does the 2010 Dodd-Frank financial reform bill restore the Glass-Steagall Act?
Mishkin Chapter 11/12 ("Financial Innovation..."): Part B
Key In-Class Discussion Questions (M11/12-B):
- What are some of the most important financial innovations that
have been introduced in the U.S. since the 1950s, and what has led to
- How have these financial innovations affected the profitability and
viability of traditional banking in the U.S.?
- How did the U.S. financial crisis in the 1980s shape
subsequent efforts to restructure the U.S. financial system?
- Is government-provided deposit insurance always a good thing?
- Are asset holding restrictions and capital requirements simply a costly
nuisance, or are they an essential aspect of sound banking?
- What's wrong (if anything) with permitting interstate bank branching?
Should we worry about "saving the family banker" just like we worry about
"saving the family farmer"?
- Should banks have to obtain charters (licenses) in order to do business?
- What is the 1977 Community Reinvestment Act (CRA) all about, and why is
it so controversial?
- (Web Browse Question) Why did some commentators in 1999 express concerns that the major financial restructuring called for in the 385-page 1999 Gramm-Leach-Bliley Act would increase the difficulty of maintaining suitable oversight of financial institutions in the U.S., perhaps encouraging more "Enron"-type scandals in the future?
- (Web Browse Question) Why did some commentators after 1999 claim that the provisions of the Gramm-Leach-Bliley act were a major threat to consumer privacy?
- Key Issues (M11/12-B):
- What kinds of financial innovations have arisen in the U.S. from
attempts to get around U.S. bank branching restrictions?
- Why have U.S. banks increasingly opened branches abroad in recent years?
- What empirical events in the U.S. have led to the financial engineering
of new types of financial products?
- What are some examples of these financially engineered products?
- Why do banking regulations tend to encourage financial innovation?
- How have money market funds, junk bonds, commercial paper, and
securitization tended to reduce the profitability of traditional bank
- What types of government safety net provisions have been enacted for
U.S. banks, and what was the reason for their enactment?
- What kinds of weaknesses in these government safety net provisions
were revealed during the U.S. financial crisis in the 1980s?
- What government safety net reforms were introduced in the U.S.
as a result of the U.S. financial crisis in the 1980s?
- Why have bank regulators imposed asset holding restrictions
on U.S. banks, and what form have these restrictions taken?
- What are the possible advantages and disadvantages of these asset
- Why have bank regulators imposed capital (net worth)
requirements on U.S. banks,
and what form have these requirements taken?
- What are the possible advantages and disadvantages of these
- Why have bank regulators imposed chartering restrictions on U.S. banks,
and what form have these chartering restrictions taken?
- What are the possible advantages and disadvantages of these chartering
- Why have bank regulators imposed disclosure requirements
on U.S. banks, and what form have these requirements taken?
- What are the possible advantages and disadvantages of these disclosure
- What kinds of consumer protection laws have been imposed on U.S. banks?