Chapter 6 Banks and Other Intermediaries 6.1 The Nature of Financial Intermediation 6.2 Depository Financial Institutions The deposit liabilities of these institutions form the cornerstones of the money supply. Generally speaking, commercial banks are the largest depository institutions. 6.2.1 Fundamentals of bank management 6.2.2 They have financial claims on both the asset and liability sides of their balance sheet. Liabilities represent a bank’s source of funds. Assets represent a bank’s uses of funds。 6.2.3 uses of bank funds 1.cash assets Reserves 准备金(法定准备金和超额准备金):funds that a bank holds in the form of vault cash or deposits at the Federal Reserve. 应收现金项目 银行同业存款 2.government and agency securities 3.business loans 4.consumer loans 5.mortgage loans 6.other loans 7.miscellaneous assets Why is it that no stocks are included among bank assets? Commercial banks traditionally have barred by law from owning stocks. 6.2.4 Sources of bank funds 1. transactions deposits （交易存款） 2. nontransactionsdeposits (非交易存款) Nontransactionsdeposits consist of domestic deposits that either have limited check-writing privileges or no check-writing privileges at all. Nontransactionsdeposits includes savings, time deposits 3.foreign deposits 4.borrowed funds 5.“miscellaneous” liabilities : borrowings from the Federal Reserve borrowings in the Federal funds market borrowings by banks from their foreign branches, their parent holding companies(银行控股公司),and their subsidiaries and affiliates. repurchase agreements. 6.Another source of bank funds, and one that has become increasingly important arise from the sale of assets through securitization(证券化) Securitization:pooling a group pf loans into a trust and then selling securities issued against the trust, thus transforming nontraded loans into traded securities. Asset securitization(资产证券化): Mortgage-BackedSecurities-ABS 抵押支持证券 Asset-Backed Securities-ABS 资产支持证券 Asset-Backed-Commercial Paper-ABCP资产支持商业票据 7. One source of bank funds is Equity capital, which represents the amount of ownership interest in the bank. 6.2.5 Bank profitability ---net interest income， interest on loans + interest on securities and investments- interest expense ---service charges and fees ---other operating income net income after taxes net interest margin(净利息比率)：net interest margin expressed as a percent of total bank assets. Many factors affect a bank’s net interest margin. The profitability (盈利率) of banks are measured by return on assets (ROA 资产回报率) 税后净利润 ROA= -------------- 资产 Return on equity(ROE股权报率回),which is net income divided by equity capital. 6.2.6 Bank risk Higher returns come at expense of more risk. Banks face many kinds of risk. Leverage risk credit risk interest rate risk trading risk liquidity risk 6.3 major trends in bank management 6.3.1 consolidation of banking industry How to measure the consolidation of banking industry ? the Mcfadden act (麦克法登法案) o number of banks o the number of independent banking organizations economies of scale in banking economics of scope in banking 6.3.2 nontraditional banking Glass-Steagall Act of 1933(格拉斯---斯 蒂格尔法) bank holding company银行持股公司 A holding company that owns one or more banks and possible other (nonbank) subsidiaries. 1999年，美国国会正式通过《金融现代化法案》。 6.3.3 globalization ---American Banks abroad ---Foreign Banks in the United States ---The Euromarket: the market for Eurodollars and Eurobonds. Eurobond is the long-term part of the Euromarket (欧洲债券是在欧洲货币市场上发行的、以市场所在国以 外的货币标示的债券。) The first Eurobond appeared in 1963 when a British investment bank underwrote a U.S. dollar- denominated bond issue for the Italian highway agency. International banking facilities (IBFs) 6.3.4. main types of Eurobond: vFixed-rate Bond vFloating Rate Notes,FRNs Interest Cap (顶盖式定息) Interest Rate Cap 上限锁住利率 Interest Rate Collar上下限锁住利率 vConvertible Bond vDual-currency Bonds(双币债券) 6.4 nonbankdepository institutions---thrifts qsavings and loan associations qmutual savings banks qcredit unions Their principal source of funds is consumer deposits. 6.5 Nondepository Financial Institutions 3.1 life insurance companies （人寿保险公司） They are structured as either stock companies（股份公司）or mutual associations（互助公司）. Policy保险单 6.5.1 pension funds （养老基金） These plans come in two kinds: qdefined benefit plans （限定收益计划） qdefined contribution plans （限定缴款计划） 6.5.2 property and casualty insurance companies （财产和灾害保险公司） In US, there are more than 3000 property and casualty insurance companies. 6.5.3 mutual funds A fund that pools the investments of a large number of shareholders and purchases securities such as stocks or, in a money market mutual fund, money market instruments. 互助基金是通过向许多小投资者发行股份来聚合资金、并 用以购买证券的金融中介。 1 stock market mutual funds They are generally called mutual funds or investment companies. 2 money market mutual funds A mutual fund pools the funds of many people, the managers of fund invest the money in many kinds of securities and try to achieve some stated objective, like long-term growth of capital, and so on. NAV:从基金总资产中扣除所有负债后的净资产价值。 open-end mutual funds (开放式基金) which sell redeemable shares in the fund to the general public. closed-end mutual funds封闭式基金 no-load funds 无负载基金: which sell their shares directly to the public at the current net asset value. load funds负载基金：which charge a sales commission 6.5.4 finance companies qcommercial finance companies Commercial finance companies make commercial loans on a secured basis. qconsumer finance companies Consumer finance companies make consumer loans. Finance companies borrow substantial amounts in commercial paper market, they are the largest category of commercial paper issuer. General Electric Capital Corporation Leveraged buyout(LBO杠杆收购) The acquisition of a company where the acquisition is substantially financed by debt. LBO指某企业拟收购其他企业时,通过目标企业的大量举债来 向股东购买企业股权的行为。 Management LBO 管理层收购 MBO Captive finance companies: A finance company that is owned by a parent company and whose Principal activities are associated with financing the products sold by its parent company. 6.5.5 securities brokers and dealers and investment banks underwriting 认购 Primary markets refer to the sale and distribution of securities when they originally issued by the corporations or government units which raise money. Secondary markets involve the subsequent trading of those securities issued in primary markets. investment banks operate in primary markets. Syndicate (辛迪加): which includes many investment banks and brokerage firms. The Syndicate is organized by a managing group of investment banks with one manager as the lead manager . Investment banks get a substantial amount of their income from offering advice to firms involved in mergers merger and acquisitions. Hostile takeover brokers and dealers are involved in secondary markets, trading securities which are issued in primary markets. Brokers do not buy or sell for their own account. They match buyers and sellers of a particular security and earn a commission or fee for bringing the buyers and sellers together. Dealers trade on their own account. venture capital funds and mezzanine debt funds These funds are usually not available to the public investors. Venture capital funds invest in the equity of new “start-up” companies. Mezzanine debt funds invest in subordinated debt, or a combination of debt and equity. 6.5.6 banks versus nondepository institutions Many nondepositoryinstitutions offer services that complete directly with banks.