1、PART FOUR Transparency Masters: Chapter Outlines 113 Part I Introduction Chapter 1 Why Study Money, Banking, and Financial Markets? Why Study Financial Markets? The Bond Market and Interest Rates The Stock Market Why Study Financial Institutions and Banking? Structure of the Financial System Financi
2、al Crises Banks and Other Financial Institutions Financial Innovation Why Study Money and Monetary Policy? Money and Business Cycles Money and Inflation Money and Interest Rates Conduct of Monetary Policy Fiscal Policy and Monetary Policy Why Study International Finance? The Foreign Exchange Market
3、The International Financial System How We Will Study Money, Banking, and Financial Markets Exploring the Web Collecting and Graphing Data Web Exercises Concluding Remarks Summary 114 Appendix to Chapter 1: Defining Aggregate Output, Income, the Price Level, and the Inflation Rate Aggregate Output an
4、d Income Real Versus Nominal Magnitudes Aggregate Price Level Growth Rates and the Inflation Rate 115 Chapter 2 An Overview of the Financial System Function of Financial Markets Structure of Financial Markets Debt and Equity Markets Primary and Secondary Markets Exchanges and Over-the-Counter Market
5、s Money and Capital Markets Financial Market Instruments Money Market Instruments Following the Financial News: Money Market Rates Capital Market Instruments Following the Financial News: Capital Market Interest Rates Internationalization of Financial Markets Global: Are U.S. Capital Markets Losing
6、Their Edge? International Bond Market, Eurobonds, and Eurocurrencies World Stock Markets Following the Financial News: Foreign Stock Market Indexes Function of Financial Intermediaries: Indirect Finance Transactions Costs Global: The Importance of Financial Intermediaries Relative to Securities Mark
7、ets: An International Comparison Risk Sharing Asymmetric Information: Adverse Selection and Moral Hazard 116 Types of Financial Intermediaries Depository Institutions Contractual Savings Institutions Investment Intermediaries Regulation of the Financial System Increasing Information Available to Inv
8、estors Ensuring the Soundness of Financial Intermediaries Financial Regulation Abroad Summary 117 Chapter 3 What Is Money? Meaning of Money Functions of Money Medium of Exchange Unit of Account Store of Value Evolution of the Payments System Commodity Money Fiat Money Checks Electronic Payment E-Mon
9、ey FYI: Are We Headed for a Cashless Society? Measuring Money The Federal Reserves Monetary Aggregates Following the Financial News: The Monetary Aggregates FYI: Where Are All the U.S. Dollars? How Reliable Are the Money Data? Summary 118 Part II Financial Markets Chapter 4 Understanding Interest Ra
10、tes Measuring Interest Rates Present Value Application: Simple Present Value Application: How Much Is That Jackpot Worth? Four Types of Credit Market Instruments Yield to Maturity Application: Yield to Maturity on a Simple Loan Application: Yield to Maturity and the Yearly Payment on a Fixed-Payment
11、 Loan Application: Yield to Maturity and the Bond Price for a Coupon Bond Application: Perpetuity Global: Negative T-Bill Rates? It Can Happen The Distinction between Interest Rates and Returns Maturity and the Volatility of Bond Returns: Interest-Rate Risk FYI: Helping Investors to Select Desired I
12、nterest-Rate Risk Summary The Distinction between Real and Nominal Interest Rates Application: Calculating Real Interest Rates FYI: With TIPS, Real Interest Rates Have Become Observable in the United States Summary 119 Chapter 5 The Behavior of Interest Rates Determinants of Asset Demand Wealth Expe
13、cted Returns Risk Liquidity Theory of Asset Demand Supply and Demand in the Bond Market Demand Curve Supply Curve Market Equilibrium Supply and Demand Analysis Changes in Equilibrium Interest Rates Shifts in the Demand for Bonds Shifts in the Supply of Bonds Application: Changes in the Interest Rate
14、 Due to Expected Inflation: The Fisher Effect Application: Changes in the Interest Rate Due to a Business Cycle Expansion Application: Explaining Low Japanese Interest Rates Application: Reading the Wall Street Journal “Credit Markets” Column Following the Financial News: The “Credit Markets” Column
15、 Supply and Demand in the Market for Money: The Liquidity Preference Framework 120 Changes in Equilibrium Interest Rates in the Liquidity Preference Framework Shifts in the Demand for Money Shifts in the Supply of Money Application: Changes in the Equilibrium Interest Rate Due to Changes in Income,
16、the Price Level, or the Money Supply Application: Money and Interest Rates Summary 121 Chapter 6 The Risk and Term Structure of Interest Rates Risk Structure of Interest Rates Default Risk Application: The Subprime Collapse and the Baa-Treasury Spread Liquidity Income Tax Considerations Summary Appl
17、ication: Effects of the Bush Tax Cut and Its Possible Repeal on Bond Interest Rates Term Structure of Interest Rates Following the Financial News: Yield Curves Expectations Theory Segmented Markets Theory Liquidity Premium and Preferred Habitat Theories Evidence on the Term Structure Summary FYI: Th
18、e Yield Curve as a Forecasting Tool for Inflation and the Business Cycle Application: Interpreting Yield Curves, 19802009 Summary 122 Chapter 7 The Stock Market, the Theory of Rational Expectations, and the Efficient Market Hypothesis Computing the Price of Common Stock The One-Period Valuation Mode
19、l The Generalized Dividend Valuation Model The Gordon Growth Model How the Market Sets Stock Prices Application: Monetary Policy and Stock Prices Application: The Subprime Financial Crisis and the Stock Market The Theory of Rational Expectations Formal Statement of the Theory Rationale Behind the Th
20、eory Implications of the Theory The Efficient Market Hypothesis: Rational Expectations in Financial Markets Rationale Behind the Hypothesis Stronger Version of Efficient Market Hypothesis Application: Practical Guide to Investing in the Stock Market FYI: Should You Hire an Ape as Your Investment Adv
21、isor? Application: What Do the Black Monday Crash of 1987 and the Tech Crash of 2000 Tell Us About Rational Expectations and Efficient Markets? Behavioral Finance Summary 123 Part III Financial Institutions Chapter 8 An Economic Analysis of Financial Structure Basic Facts About Financial Structure T
22、hroughout the World Transactions Costs How Transactions Costs Influence Financial Structure How Financial Intermediaries Reduce Transaction Costs Asymmetric Information: Adverse Selection and Moral Hazard The Lemons Problem: How Adverse Selection Influences Financial Structure Lemons in the Stock an
23、d Bond Markets Tools to Help Solve Adverse Selection Problems FYI: The Enron Implosion How Moral Hazard Affects the Choice Between Debt and Equity Contracts Moral Hazard in Equity Contracts: The Principal-Agent Problem Tools to Help Solve the Principal-Agent Problem How Moral Hazard Influences Finan
24、cial Structure in Debt Markets Tools to Help Solve Moral Hazard in Debt Contracts Summary Application: Financial Development and Economic Growth FYI: Should We Kill All the Lawyers? Application: Is China a Counter-Example to the Importance of Financial Development? 124 Conflicts of Interest What Are
25、 Conflicts of Interest and Why Do We Care? Why Do Conflicts of Interest Arise? What Has Been Done to Remedy Conflicts of Interest? FYI: The Demise of Arthur Andersen FYI: Credit-Rating Agencies and the Subprime Financial Crisis FYI: Has Sarbanes-Oxley Led to a Decline in U.S. Capital Markets? Summar
26、y 125 Chapter 9 Financial Crises and the Subprime Meltdown Factors Causing Financial Crises Asset Market Effects on Balance Sheets Deterioration in Financial Institutions Balance Sheets Banking Crisis Increases in Uncertainty Increases in Interest Rates Government Fiscal Imbalances Dynamics of Past
27、U.S. Financial Crises Stage One: Initiation of Financial Crisis Stage Two: Banking Crisis Stage Three: Debt Deflation Application: The Mother of All Financial Crises: The Great Depression The Subprime Financial Crisis of 20072008 Financial Innovations Emerge in the Mortgage Markets Housing Price Bub
28、ble Forms Agency Problems Arise Information Problems Surface Housing Price Bubble Bursts Crisis Spreads Globally Banks Balance Sheets Deteriorate High-Profile Firms Fail Bailout Package Debated Recovery in Sight? Global: The Treasury Asset Relief Plan and Government Bailouts 126 Dynamics of Financia
29、l Crises in Emerging Market Economies Stage One: Initiation of Financial Crisis Stage Two: Currency Crisis Stage Three: Full-Fledged Financial Crisis Application: Financial Crises in Mexico, 19941995; East Asia, 19971998; and Argentina, 20012002 Global: The Perversion of the Financial Liberalization
30、/ Globalization Process Summary 127 Chapter 10 Banking and the Management of Financial Institutions The Bank Balance Sheet Liabilities Assets Basic Banking General Principles of Bank Management Liquidity Management and the Role of Reserves Asset Management Liability Management Capital Adequacy Manag
31、ement Application: Strategies for Managing Bank Capital Application: How a Capital Crunch Caused a Credit Crunch in 2008 Managing Credit Risk Screening and Monitoring Long-Term Customer Relationships Loan Commitments Collateral and Compensating Balances Credit Rationing Managing Interest-Rate Risk G
32、ap and Duration Analysis Application: Strategies for Managing Interest-Rate Risk 128 Off-Balance-Sheet Activities Loan Sales Generation of Fee Income Trading Activities and Risk Management Techniques Global: Barings, Daiwa, Sumitomo, and Socit Gnrale: Rogue Traders and the Principal-Agent Problem Su
33、mmary 129 Chapter 11 Economic Analysis of Financial Regulation Asymmetric Information and Financial Regulation Government Safety Net Global: The Spread of Government Deposit Insurance Throughout the World: Is This a Good Thing? Restrictions on Asset Holdings Capital Requirements Prompt Corrective Ac
34、tion Global: Basel 2: How Well Will It Work? Financial Supervision: Chartering and Examination Assessment of Risk Management Disclosure Requirements Consumer Protection FYI: Mark-to-Market Accounting and the Subprime Financial Crisis Restrictions on Competition Summary FYI: The Subprime Mortgage Cri
35、sis and Consumer Protection Regulation Global: International Financial Regulation The 1980s Savings and Loan and Banking Crisis Banking Crises Throughout the World “Dj vu All Over Again” 130 Whither Financial Regulation After the Subprime Financial Crisis? Increased Regulation of Mortgage Brokers Fe
36、wer Subprime Mortgage Products Regulation Compensation Higher Capital Requirements Additional Regulation of Privately Owned Government-Sponsored Enterprises Heightened Regulation to Limit Financial Institutions Risk Taking Increased Regulation of Credit-Rating Agencies Additional Regulation of Deriv
37、atives The Danger of Overregulation Summary 131 Chapter 12 Banking Industry: Structure and Competition Historical Development of the Banking System Multiple Regulatory Agencies Financial Innovation and the Growth of the “Shadow Banking System” Responses to Changes in Demand Conditions: Interest Rate
38、 Volatility Responses to Changes in Supply Conditions: Information Technology FYI: Will “Clicks” Dominate “Bricks” in the Banking Industry? Avoidance of Existing Regulations FYI: Bruce Bent and the Money Market Mutual Fund Panic of 2008 Financial Innovation and the Decline of Traditional Banking Str
39、ucture of the U.S. Commercial Banking Industry Restrictions on Branching Response to Branching Restrictions Bank Consolidation and Nationwide Banking The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 What Will the Structure of the U.S. Banking Industry Look Like in the Future?
40、Global: Comparison of Banking Structure in the United States and Abroad Are Bank Consolidation and Nationwide Banking Good Things? 132 Separation of The Banking and Other Financial Service Industries Erosion of Glass-Steagall The Gramm-Leach-Bliley Financial Services Modernization Act of 1999: Repea
41、l of Glass-Steagall Implications for Financial Consolidation Separation of Banking and Other Financial Services Industries Throughout the World FYI: The Subprime Financial Crisis and the Demise of Large, Free-Standing Investment Banks Thrift Industry: Regulation and Structure Savings and Loan Associ
42、ations Mutual Savings Banks Credit Unions International Banking Eurodollar Market Global: The Ironic Birth of the Eurodollar Market Structure of U.S. Banking Overseas Foreign Banks in the United States Summary 133 Part IV Central Banking and the Conduct of Monetary Policy Chapter 13 Central Banks an
43、d the Federal Reserve System The Price Stability Goal and the Nominal Anchor The Role of a Nominal Anchor The Time-Inconsistency Problem Other Goals of Monetary Policy High Employment Economic Growth Stability of Financial Markets Interest-Rate Stability Stability in Foreign Exchange Markets Should
44、Price Stability Be The Primary Goal of Monetary Policy? Hierarchical Versus Dual Mandates Price Stability as the Primary, Long-Run Goal of Monetary Policy Origins of the Federal Reserve System Inside the Fed: The Political Genius of the Founders of the Federal Reserve System Structure of the Federal
45、 Reserve System Federal Reserve Banks Inside the Fed: The Special Role of the Federal Reserve Bank of New York Member Banks 134 Board of Governors of the Federal Reserve System Inside the Fed: The Role of the Research Staff Federal Open Market Committee (FOMC) The FOMC Meeting Inside the Fed: Green,
46、 Blue, and Beige: What Do These Colors Mean at the Fed? Why the Chairman of the Board of Governors Really Runs the Show How Independent Is the Fed? Inside the Fed: How Bernankes Style Differs from Greenspans Structure and Independence of the European Central Bank Differences Between the European Sys
47、tem of Central Banks and the Federal Reserve System Governing Council How Independent Is the ECB? Structure and Independence of Other Foreign Central Banks Bank of Canada Bank of England Bank of Japan The Trend Toward Greater Independence Explaining Central Bank Behavior Inside the Fed: The Evolutio
48、n of the Feds Communication Strategy Should the Fed Be Independent? The Case for Independence The Case Against Independence Central Bank Independence and Macroeconomic Performance Throughout the World Summary 135 Chapter 14 The Money Supply Process Three Players in the Money Supply Process The Feds
49、Balance Sheet Liabilities Assets Control of the Monetary Base Federal Reserve Open Market Operations Shifts from Deposits into Currency Discount Loans Other Factors That Affect the Monetary Base Overview of the Feds Ability to Control the Monetary Base Multiple Deposit Creation: A Simple Model Deposit Creation: The Single Bank Deposit Creation: The Banking System Deriving the Formula for Multiple Deposit Creation Critique of the Simple Model Factors That Determine the Money Supply Changes in the Nonborrowed Monetary Base, MBn Changes in Borrowed Reserves, BR, from t
