Lecture The economics of Money, Banking and Financial markets: Chapter 11 Economic analysis of banking regulation. In this chapter, we examine how banking is conducted to earn the highest profits possible, how and why banks make loans, how they acquire funds and manage their assets and liabilities (debts), and how they earn income. We also examine how banks cope with credit risk, the risk arising because borrowers may default on their obligations, and with interest-rate risk, the risk arising from fluctuations in interest rates. |
