These include commercial banks and thrift Institutions as explained below: Commercial Banks: These banks raise funds by accepting deposits on which cheques can be written, savings deposits and fixed time deposits. These banks use these funds in commercial, consumer and mortgage loans and to buy Pakistan Govt. Securities and Municipal Bonds. There are a number of Commercial banks in Pakistan and these are the largest financial intermediary and have the most diversified collections of assets. Askari Bank, Habib Metropolitan Bank, MCB, Standard Chartered Bank, Bank AlFalah, UBL, Bank AlHabib Limited, NBP, HBL, Citi Bank, Allied Bank Limited.etc.
(5 points) The banks create money by loaning out money that people have deposited in and earn interest differences between borrowing and lending. They only keep a small fraction of the money on hand for liquidity use. C. List the two major assets and the main liability of a typical bank operating under a fractional reserve system.
(5 points) The banks create money by loaning out money that people have deposited in and earn interest differences between borrowing and lending. They only keep a small fraction of the money on hand for liquidity use. C. List the two major assets and the main liability of a typical bank operating under a fractional reserve system.
Explain why some financial institutions prefer to provide credit in financial markets outside their own country. Many financial institutions want to explore the financial markets outside their country to increase their presence on a much broader market. Also, doing so provides the institutions with better financial security. For example, if their country is experiencing an economic meltdown then the institution would not be greatly affected by such turbulence. Moreover, the financial institutions could earn higher return if dealing with markets that have high interest rates and a steady economy.
Furthermore, money and its value, the key raw material of the financial services industry, to a large extent is both defined and determined by the nation state, i.e. by regulating authorities par excellence. Safety and soundness of the financial system as a whole and the enactment of industrial, financial, and fiscal policies are regarded as the main reasons to regulate the financial industry (see Kareken, 1986; Goodhart, 1987; Boot and Thakor, 1993). Also, the financial history shows a clear interplay between financial institutions and markets and the regulators, be it the present-day specialized financial supervisors or the old-fashioned sovereigns (Kindleberger, 1993). Regulation of financial intermediaries, especially of banks, is costly.
Investment banking: The main role of the investment bank is to help companies and governments raise capital on capital markets, either through the issue of securities (otherwise known as shares) or debt. Their main business involves the issuance of new debt as well as providing business consulting services on mergers and acquisitions and other types restructuring of enterprises (Casu, Girardone, and Molyneux,
Bangladesh faces many economical problems because of overpopulation even though they’re economy has been increasing in the recent years (Quartz). One of the biggest problems in Bangladesh is political instability (World Bank). Since there are more and more people in Bangladesh, people can vote for a candidate who isn’t so qualified and cause a shift in the election. Also, if the wrong candidate is chosen by these new people, the candidate can cause the economy to crash. A major political issue in many countries and especially in Bangladesh is the dowry system.
As discussed in the first question, banks are a crucial part of the economy and they use largely use derivatives to hedge the risks. During Lehman Brothers meltdown, banks did not fully understand the level of losses that could incurred on derivatives trade with Lehman and others and as a result, it created great panic in the financial markets. Therefore, it is important to have clear rules regulating these risky products 3. Derivatives can be considered one of the ways to share or distribute risks. It is requires financial engineering of different products and there is no fixed contract/combination that will guarantee profits.
Generally inter banks does not take any help of the intermediaries but the banks deal through the foreign exchange brokers. The amount of purchase and sale of currency bought and sold Commercial banks also help the foreign exchange markets to stabilise the domestic
Institutions like central banks, commercial banks and acceptance houses are operating in money markets. Short-term debt that issued by money markets is often for the purpose of covering the operating expenses or working capital of a company. This may help these companies to maintain the appropriate level of liquidity on a daily