Popular in Financial Institutions
Popular in Finance
This 2 page Class Notes was uploaded by Sylvia Notetaker on Tuesday September 8, 2015. The Class Notes belongs to FNAN 321 at George Mason University taught by Mike Anderson in Spring 2015. Since its upload, it has received 24 views. For similar materials see Financial Institutions in Finance at George Mason University.
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Date Created: 09/08/15
FNAN 321 Week 2 Class 2 Depository Institutions Slide 10 Equity capital is important in managing risk if its right then the economy is good shape if not than you might have a crisis Slide12 It s decreasing because of merging and bankruptcy On the left side you will notice mergers Slide 13 Merger in the 90 s because of regulation failure of finance section Slide 14 Prime rate is the rate the banks charge favorable customer for borrowing Many times these customers are other banks The prime rate usually runs about 300 bps above the federal funds rate the rate that banks charge each other for overnight lending of reserves at the fed Prime rate today is 3 and quarter Inflation that is why it s high Slide 16 How big banks make their loans Look at the credit score and see the leverage Small banks They have relationship with the borrowers So they collect info about you Why we care about the small business Because it make a lot of the industry 50 o employments comes from small business than big ones Small business as economic indicator if it is good than the economy is good and vice versa Slide 21 interest on checking account so you cannot take your money out Slide 31 depositors are the ones Who bringing up the mess Slide 41 Home mortgages they make a lot of them as you can see it s the high percentage as well as consumer credit Why they do make consumer because they build consumer Slide 42 They get most of their deposits from You are not really deposit money you are buying ownership in the company Slide 43 They do not make any profit because they are non profit They charge less on the loans so they make less on the market and charge higher on deposits lower interest on loans and higher on deposits At the end of the year they get some dividend Slide 46 They are more diversified the commercial banks they spend in more stuff Most focus on mortgage loans saving institutions Lot of us treasury securities and consumer loans than any other and mortgages credit unions Slide47 All three rely on liabilities because of liquidity because they get their money from deposits