Banking/Related Articles

Index

See the related articles subpage to the article on economics [1] for an index to topics referred to in the economics articles.

Glossary

(For definitions not shown below, see the economics glossary [2])

• Asset price bubbles [r]: The condition of an asset market in which price is governed by speculators' expectations that it will increase. ^[e]
• "Bad bank" [r]: A subsidiary, or separate corporation, created to hold and manage non-performing assets transferred to it by a rescued bank. ^[e]
•   Banking panic - see Panic (banking)
• Basel I & Basel II [r]: international banking regulations put forth by the Basel Committee on Bank Supervision of the Bank for International Settlements requiring banks' minimum capital adequacy ratios to be related to the riskiness of their loans. ^[e]
• Bill of Exchange [r]: A written order to pay the holder a stated sum of money at a stated date (otherwise known as a "draft", the person who is paid being termed the "drawer"). ^[e]
• Bubble (economics) [r]: A surge in prices that raises expectations of further increases, so generating further increases: a process that continues until confidence falters, the bubble "bursts" and prices rapidly revert to an objectively-based level. ^[e]
• Capital adequacy ratio [r]: The ratio of a bank's capital to its risk weighted credit exposures. May be defined in terms of tier 1 (core) or tier 2 capital. ^[e]
• Central Bank [r]: A government agency that is responsible for monetary policy and the support of the banking system (for example the Federal Reserve Board and the Bank of England). Usually responsible for controlling a country's monetary policy and preserving the value of its currency. ^[e]
• Commercial paper [r]: unsecured debt_instruments that are issued by corporations to meet short term financing needs (usually repayable after 3 months). ^[e]
• Contingent convertible bond [r]: A bond that converts automatically into shares in a stipulated contingency (for a bank the stipulated contingency is normally that its reserve ratio falls below a stipulated level). Often called a "coco": also known as an "enhanced capital note". ^[e]
• Credit easing [r]: A method of making credit more available to individuals and businesses by changing the composition of the assets of the central bank towards less liquid and riskier private sector assets. Unlike quantitative easing, it may be done without expanding the money supply. ^[e]
• Credit risk [r]: The risk that the value of a loan-based security will fall as a result of defaults on the part of borrowers (as distinct from interest rate risks and exchange rate risks). ^[e]
• Debt_instrument [r]: A formal obligation assumed by a borrower to replay the lender in accordance with the terms of an agreement, including bonds, debentures, promissory notes, leases and mortgages. ^[e]
• Derivative [r]: An asset whose value depends upon the expected value of another asset. ^[e]
• Discounting [r]: (i) The action of selling a bill of exchange before its due payment (or "maturity") date "at a discount": that is to say after paying the purchaser a fee for accepting it. (ii) The practice of calculating the current equivalent of a future cost or benefit by the application of a chosen discount rate. ^[e]
• Discount_rate [r]: (i) The percentage by which current value exceeds value in a year's time. (ii) The rate at which banks may borrow at their central bank's discount window. ^[e]
• Discount window [r]: A facility provided by central banks that enables a bank to make secured short-term loans at its central bank's discount rate. ^[e]
• Draft (finance) [r]: Another name for a bill of exchange (termed "bank draft" if issued by a bank: otherwise "trade draft"). ^[e]
• Enhanced capital note [r]: A bond issued by a bank that converts automatically into that bank's shares if its reserve ratio falls below a stipulated level (also known as a "contingent convertible bond"}. ^[e]
• Federal funds rate [r]: The overnight interest rate at which banks lend balances at the Federal Reserve to other banks. ^[e]
• Fair value [r]: An accounting convention under which the balance sheet valuation of an asset is an estimate of a price that would be fair to both a seller and a buyer of that asset, taking account of the advantages of the transaction to each (replacing the "historical" convention under which assets were valued at the price at which they had been acquired). ^[e]
• Fiat money [r]: money whose value is determined solely by government order, or "fiat" (as distinct from commodity money that has value because of its scarcity or cost of production). ^[e]
• Great moderation [r]: the period between 1980 and 2007 during which the volatility of US output was less than half that of the preceding post-war period. ^[e]
• Interbank market [r]: a market in which a group of banks lend to each other (for example, see LIBOR). ^[e]
• Interest rate risk [r]: The risk that the value of a fixed-rate security or loan will fall as a result of a rise in interest rates. ^[e]
• Leverage [r]: (i) The use of borrowing to increase the amount of money that is available for investment or consumption. (ii) A proportional measure of indebtedness, such as the ratio of a company's debt to its shareholders' equity (the same as British "gearing"), or the ratio of the indebtedness of a household to the net value of its assets (ie net of its debts). ^[e]
• LIBOR [r]: Add brief definition or description
• Liquidity [r]: Add brief definition or description
• Liquidity risk [r]: Add brief definition or description
• Liquidity trap [r]: Add brief definition or description
• Macroprudential financial policy [r]: Add brief definition or description
• Margin account [r]: Add brief definition or description
• Margin call [r]: Add brief definition or description
• Market risk [r]: Add brief definition or description
• Monetary base [r]: Add brief definition or description
• Monetary policy [r]: Add brief definition or description
• Money market [r]: Add brief definition or description
• Moral hazard [r]: Add brief definition or description
• Open market operation [r]: Add brief definition or description
• Panic (banking) [r]: Add brief definition or description
• Prime rate [r]: Add brief definition or description
• Qualitative easing [r]: Add brief definition or description
• Quantitative easing [r]: Add brief definition or description
• Reserves (banking) [r]: Add brief definition or description
• Reserve ratio [r]: Add brief definition or description
• Run (banking) [r]: Add brief definition or description
• Securitisation [r]: Add brief definition or description
• Sterilisation, monetary [r]: Add brief definition or description
• Stress test (banking) [r]: Add brief definition or description
• Structured investment vehicle [r]: Add brief definition or description
• Tier 1 capital [r]: Add brief definition or description
• Tier 2 capital [r]: Add brief definition or description
• Value at risk [r]: Add brief definition or description
• Wholesale banking [r]: Add brief definition or description