Simpson, CFA As banks have very different operating structures than regular industrial companies, it stands to reason that investors have a different set of fundamental factors to consider, when evaluating banks. This is not meant as an exhaustive or complete list of the financial details an investor needs to consider, when contemplating a bank investment.
ET A crisis-era red light is flashing and Banking system old fears about banks. But the world has changed a lot since The basic cost of money lent between banks has seen a sharp rise over recent weeks. Libor, this measure of how much banks charge to lend to each other, is the rate that shot-up during the crisis when a complete failure of trust between banks froze the money markets.
It is the rate that found infamy when banks were shown to have been manipulating it too.
Then there is the cost of short-term borrowing in commercial paper markets, which is where people get worried because banks use these for some of their funding.
Some point to the shrinking investor base for so-called prime money-market fundswhich are key buyers of commercial paper. All that cash went into money-market funds that only invest in government-backed paper.
Domestic and foreign issuance of financial sector commercial paper has also shrunk in this time, indicating banks are tapping this channel for less funding. For banks everywhere, the crisis was a brutal lesson in the dangers of short-term funding. They have been forced to change.
If Libor keeps rising sharply that will prove a problem for indebted companies and households whose interest costs are linked to it. If defaults rise, that would lead to pain for lenders too.
Write to Paul J.Mar 15, · But, if the Chinese start to throw around money in the same fashion that Americans do, it will push the banking system to breaking point.
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Non-performing Assets (NPAs) INTRODUCTION. In the last article on “Understanding the banking system“, we had discussed the Basel norms. We learnt what Basel norms are and why they hold such importance for the Indian banking system. Journal of Management Information System and E-commerce Vol.
1, No. 1; June 1.
Orjakor (, –) holds that the organ of the Nigerian Banking system dates back to the colonial period. The activities of the extra territorial merchants in the former West African colonies and the establishment of settle territorial government created need.
For locally based financial institutions in , the banks for British West African was . A bank is a financial institution that accepts deposits from the public and creates credit. Lending activities can be performed either directly or indirectly through capital kaja-net.com to their importance in the financial stability of a country, banks are highly regulated in most countries.
Most nations have institutionalized a system known as fractional reserve banking under which banks hold.