Scribd Logo
Upload

Welcome to Scribd!

  • 30 views

    Money and Banking and Financial Markets

    Uploaded by

    mihaela1.nicolau7540
    This document introduces key concepts related to money, banking, and financial markets. It discusses how financial markets bring together buyers and sellers of financial securities to establish prices. It defines money as including currency as well as demand deposits used to facilitate transactions and influence the overall economy. The document also describes how banks intermediate funds from savers to borrowers by investing in loans, and how banks and the central bank influence monetary policy and the money supply.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Money and Banking and Financial Markets

    Uploaded by

    mihaela1.nicolau7540
    30 views8 pages
    This document introduces key concepts related to money, banking, and financial markets. It discusses how financial markets bring together buyers and sellers of financial securities to establish prices. It defines money as including currency as well as demand deposits used to facilitate transactions and influence the overall economy. The document also describes how banks intermediate funds from savers to borrowers by investing in loans, and how banks and the central bank influence monetary policy and the money supply.

    Original Description:

    Chapter 1

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    This document introduces key concepts related to money, banking, and financial markets. It discusses how financial markets bring together buyers and sellers of financial securities to establish prices. It defines money as including currency as well as demand deposits used to facilitate transactions and influence the overall economy. The document also describes how banks intermediate funds from savers to borrowers by investing in loans, and how banks and the central bank influence monetary policy and the money supply.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    30 views8 pages

    Money and Banking and Financial Markets

    Uploaded by

    mihaela1.nicolau7540
    This document introduces key concepts related to money, banking, and financial markets. It discusses how financial markets bring together buyers and sellers of financial securities to establish prices. It defines money as including currency as well as demand deposits used to facilitate transactions and influence the overall economy. The document also describes how banks intermediate funds from savers to borrowers by investing in loans, and how banks and the central bank influence monetary policy and the money supply.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 8

    Chapter 1: Introduction

    MONEY AND BANKING


    AND FINANCIAL
    MARKETS
    Why Study Money, Banking, and Financial
    Markets:
    9

    To examine how financial markets


    work
    To examine how financial
    institutions such as banks and
    insurance companies work
    To examine the role of money in
    the economy
    Introduction of Concepts
    10

    Financial Markets/Institutions
    Bringing together of buyers and sellers of
    financial securities to establish prices
    The formal setting/mechanism that brings
    buyers and sellers together to value financial
    assets
    Provides a mechanism for those with
    excess funds (savers) to lend to those who
    need funds [borrowers]
    Introduction of Concepts (Cont.)
    11

    Money
    “Lubricant that greases the wheels of economic
    activity”
    Not just limited to currency (bills and coins)—
    also includes demand deposits (checking
    accounts) issued by banks
    Plays a key role in influencing the behavior of
    the economy as a whole and the performance of
    financial institutions and markets
    Introduction of Concepts (Cont.)
    12

    Money (Cont.)
    More broadly the monetary economy
    Facilitates transactions within the economy
    Principal mechanism through which central
    banks attempt to influence aggregate economic
    activity
    Economic Growth
    Employment
    Inflation
    Introduction of Concepts (Cont.)
    13

    Banking
    Banks and other financial intermediaries (insurance
    companies, pension funds) take funds from one group
    (savers) and re-deploy these funds by investing or
    lending (borrowers)
    Banks provide a place where individuals and businesses
    can invest their funds to earn interest with a minimum of
    risk
    Well-equipped to invest in the most challenging types of
    financial investments—loans to individuals and small
    businesses
    Flow of funds from lenders to borrowers
    Introduction of Concepts (Cont.)
    15

    Banking (Cont.)
    Banks serve as the principal caretaker of the economy’s
    money supply, and along with other financial
    intermediaries, provide important source of funds
    Banks are intimately involved in how the central bank of
    the United States (Federal Reserve) [Fed] influences
    overall economic activity
    The Monetary policy is the control of the money
    supply while using the interest rate and others
    instruments. The [Fed] directly influences the lending
    and deposit creation activities of banks.

    You might also like