Description
This textbook provides students with a focus on how economic principles illustrate the evolution and conduct of financial markets and institutions, and how the international developments within these markets and institutions relate to economic performance. Features included in this new edition are: analysis of the landmark Financial Services Modernization Act of 1999 and its impact, a revised section on financial institutions, with particular attention to risk and to the continuing wave of mergers and acquisitions in the banking industry, and an updated section on the money supply process and monetary policy, with new material on currency boards, dollarization, and inflation targets.Table of Contents: I. INTRODUCTION. 1. Introducing Money and the Financial System. 2. Money and the Payments System. 3. Overview of the Financial System. II. INTEREST RATES. 4. Interest Rates and Rates of Return. 5. The Theory of Portfolio Allocation. 6. Determining Market Interest Rates. 7. Risk Structure and Term Structure of Interest Rates. III. FINANCIAL MARKETS. 8. The Foreign-Exchange Market and Exchange Rates. 9. Derivative Securities and Derivative Markets. 10. Information and Financial Market Efficiency. 11. Reducing Transactions Costs and Information Costs. IV. FINANCIAL INSTITUTIONS. 12. What Financial Institutions Do. 13. The Business of Banking. 14 The Banking Industry. 15. Banking Regulation: Crisis and Response. 16. Banking and the International Economy. V. THE MONEY SUPPLY PROCESS AND MONETARY POLICY. 17. The Money Supply Process. 18. Changes in the Monetary Base. 19. Organization of Central Banks. 20. Monetary Policy Tools. 21. The Conduct of Monetary Policy. 22. The International Financial System and Monetary Policy. VI. THE FINANCIAL SYSTEM AND THE MACROECONOMY. 23. The Demand for Money. 24. Linking the Financial System and the Economy: The IS-LM-FE Model. 25. Aggregate Demand and Aggregate Supply. 26. Money and Output in the Short Run. 27. Information Problems and Channels for Monetary Policy. 28. Inflation: Causes and Consequences.
