bank

Examples of bank in the following topics:

• A Bank Failure

  • A bank failure is a bank develops financial problems and fails.
  • Moreover, the bank could sell loans to other banks.
  • Bank borrows the funds from the central bank or from another commercial bank.
  • How does a bank prevent a bank failure?
  • Your bank could ask other banks for a loan, but other banks may decline if they believe your bank will fail.

• Online Direct Banks

  • A direct bank is a bank without any branch network.
  • Direct banks were originally based on providing banking services via telephone.
  • Upon realizing this, traditional banks began to offer limited online banking services.
  • The initial success of internet banking services provided by traditional banks led to the development of internet-only banks or "virtual banks. " These banks were designed without a traditional banking infrastructure, a cost-saving feature that allowed many of them to offer savings accounts with higher interest rates and loans with lower interest rates than most traditional banks.
  • One of the first fully functional direct banks in the United States was the Security First Network Bank (SFNB).

• The Glass Steagall Banking Act

  • This law divided the functions of investment banking and commercial banking.
  • First, the FDIC closes the bank and seizes the bank's assets.
  • Next, the FDIC keeps the bank open and searches for another bank that will buy the failed bank.
  • The FDIC also allows a bank to cross a state line to buy a failed bank.
  • Contagion is a bank run on one bank leads to bank runs on other banks.

• Becoming an International Bank

  • Banks in the United States use four methods to become an international bank, which are:
  • Method 1: The U.S. bank opens a bank branch in a foreign country.
  • Bank branches help the bank transfer money across nations' borders.
  • The U.S. bank buys and becomes a majority shareholder of a foreign bank.
  • Method 4: The U.S. bank creates an international banking facility (IBF).

• The United States Banking System

  • As of 2010, the United States had roughly 1,500 national banks and 50 foreign national banks.
  • Moreover, the Fed regulates banks.
  • The United States had 14,217 banks in 1986, which fell to 9,459 banks by 2010.
  • Unit banking restricts a bank to a single geographical location, such as in one city, and the bank cannot branch to other cities.
  • Furthermore, branch banking allows a bank to have two or more banking offices owned by a single banking corporation within a geographical area.

• Electronic Banking

  • Electronic banking includes such services as ATMs, direct deposits, electronic fund transfers, and online banking.
  • Possibly the most popular advance in banking through the use of technology is online banking.
  • Online banking services include:
  • Banks have found online banking so much cheaper than traditional in-bank methods that some have encouraged depositors and other customers to bank from home or via machines by charging them fees for the privilege of talking to a teller!
  • So-called click-and-mortar, or hybrid, banks appear more viable than completely virtual banks at present.

• Commercial Banks

  • For the most part, the term commercial bank refers to divisions of banks that deal primarily with mid-sized to large businesses.
  • Banking is, in many ways, in the business of risk.
  • There are a few types of risks banks encounter, which are useful in understanding how banks function:
  • This image demonstrated the ongoing consolidation of the banking industry, through displaying the overall assets owned by the largest 5 banks.
  • Perceive the role of commercial banks from the business sense, and recognize the variety of risks banks encounter as a result

• The World Bank

  • The World Bank's official goal is the reduction of poverty.
  • The World Bank differs from the World Bank Group, in that the World Bank comprises only two institutions: the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA), whereas the former incorporates these two in addition to three more: International Finance Corporation (IFC), Multilateral Investment Guarantee Agency (MIGA), and International Centre for Settlement of Investment Disputes (ICSID).
  • The curent President of the Bank, Jim Yong Kim, is responsible for chairing the meetings of the boards of directors and for overall management of the bank.
  • Traditionally, the bank president has always been a U.S. citizen nominated by the United States, the largest shareholder in the bank.
  • Explain the role played by the World Bank in reducing poverty

• Answers to Chapter 2 Questions

  • Bank deposits are liquid.
  • The FDIC liquidates a bank's assets and refunds the deposits to the depositors, or the FDIC finds another bank to merge with the failed bank.
  • A bank run is depositors show up at their bank at once and demand their deposits back.
  • A contagion is one bank run leads to other bank runs, even for financially healthy banks.
  • First, a bank acquires stock in another bank, allowing it to cross a state line.

• The Money Multiplier in Theory

  • The money multiplier measures the maximum amount of commercial bank money that can be created by a given unit of central bank money.
  • Central bank money, on the other hand, is the money created by the central bank and used within the banking system.
  • It consists of bank reserves held in accounts with the central bank, as well as physical currency held in bank vaults.
  • If banks lend out close to the maximum allowed by their reserves, then the inequality becomes an approximate equality, and commercial bank money is central bank money times the multiplier.
  • If banks instead lend less than the maximum, accumulating excess reserves, then commercial bank money will be less than central bank money times the theoretical multiplier.