Financial Actors Flashcards
Who are the different financial actors?
- government
- banks
- brokers
- corporates
- individuals
- regulators
- institutional investors
What are the different types of banks?
- commercial
- investment
- hybrid
What are the three departments at a bank?
- Domestic Retail
- International Retail
- CIB
What do central banks do?
write and implement monetary policy
What does monetary policy do?
it controls money supply, interest rates, and credit availability
What are the largest banks when taking into account market capitalization?
American and Chinese banks
When do European banks start appearing in the ranking?
When taking into account revenue from IB
Are American banks overvalued or undervalued?
Overvalued
Are European banks overvalued or undervalued?
Undervalued (due to stricter regulation)
What is the Glass-Steagall Act of 1933?
A regulation to separate commercial banks from investment banking to avoid contagion from one sector to another
What act repealed the Glass-Steagall Act?
The Gramm-Leach-Bliley Act of 1999 (GLBA)
What act was released in 2010 after the subprimes crisis?
The Dodd-Frank Act
What does the Dodd-Frank act do?
- Aims to increase Transparency, Consumer Protection & Financial Stability
- Increase oversight and mitigate systemic risk
- prohibit/restrain proprietary trading (Volcker rule)
What are the 2 types of asset management?
- portfolio management
- collective management
Who does asset transformation?
banks
What is asset transformation
transforming liquid assets (deposits) into illiquid assets (loans)
How does the government finance its budget?
issuing bonds
What is the process to issue bonds?
- Private placement/auction among banks => PRIMARY MARKET
- Banks resell bonds in the SECONDARY MARKET
What are the two types of bond auction?
- dutch auction: the chosen banks pay the price they bid
- american auction: the chosen bank pay the price of the lowest bidder
What are depositaries?
Institutions responsible for the safekeeping and administration of various types of assets on behalf of other
What is a fund depositary?
Financial institution responsible for holding and safeguarding assets of a mutual fund, ETF (exchange-traded fund), or other investment funds
