Additional Information
Book Details
Abstract
Provides a unique comparative survey of financial systems in Europe and the US, unified under a rigorous theoretical framework.
Table of Contents
| Section Title | Page | Action | Price |
|---|---|---|---|
| Cover | Cover | ||
| Contents | vii | ||
| Guided tour | xii | ||
| Preface | xv | ||
| Acknowledgements | xvii | ||
| Symbols, abbreviations and other conventions | xx | ||
| Part 1 Introduction | 1 | ||
| 1 The role of a financial system | 3 | ||
| 1.1 Introduction | 4 | ||
| 1.2 Lenders and borrowers | 5 | ||
| 1.3 Financial institutions | 10 | ||
| 1.4 Financial markets | 19 | ||
| 1.5 The financial system and the real economy | 20 | ||
| 1.6 Summary | 25 | ||
| Key concepts in this chapter | 25 | ||
| Questions and problems | 25 | ||
| Further reading | 26 | ||
| Part 2 Financial Institutions and Systems | 27 | ||
| 2 An introduction to financial systems | 29 | ||
| 2.1 Introduction | 30 | ||
| 2.2 Classification of financial systems | 30 | ||
| 2.3 Banks and other deposit-taking institutions | 32 | ||
| 2.4 Non-deposit-taking institutions – insurance companies and pension funds | 43 | ||
| 2.5 Non-deposit-taking institutions – mutual funds | 65 | ||
| 2.6 Summary | 71 | ||
| Key concepts in this chapter | 72 | ||
| Questions and problems | 72 | ||
| Further reading | 73 | ||
| 3 The UK financial system | 75 | ||
| 3.1 Introduction | 76 | ||
| 3.2 Banks in the UK | 76 | ||
| 3.3 Building societies in the UK | 84 | ||
| 3.4 Insurance companies | 86 | ||
| 3.5 Pension funds | 89 | ||
| 3.6 Unit trusts | 96 | ||
| 3.7 Investment trusts | 100 | ||
| 3.8 Summary | 101 | ||
| Key concepts in this chapter | 102 | ||
| Questions and problems | 102 | ||
| Further reading | 102 | ||
| 4 The US financial system | 104 | ||
| 4.1 Introduction | 105 | ||
| 4.2 Deposit-taking institutions in the USA | 105 | ||
| 4.3 The Federal Reserve System | 113 | ||
| 4.4 Non-depository institutions in the USA | 116 | ||
| 4.5 The home mortgage market and subprime lending | 119 | ||
| 4.6 Summary | 122 | ||
| Key concepts in this chapter | 123 | ||
| Questions and problems | 123 | ||
| Further reading | 123 | ||
| 5 The German financial system | 124 | ||
| 5.1 Introduction | 125 | ||
| 5.2 Banks and other deposit-taking institutions | 126 | ||
| 5.3 Non-deposit institutions | 130 | ||
| 5.4 The use of bond and equity markets in Germany | 131 | ||
| 5.5 Summary | 133 | ||
| Key concepts in this chapter | 134 | ||
| Questions and problems | 134 | ||
| Further reading | 134 | ||
| 6 The French and Italian financial systems | 135 | ||
| 6.1 Introduction | 136 | ||
| 6.2 The French banking system | 138 | ||
| 6.3 Specialist and non-deposit institutions | 144 | ||
| 6.4 Financial markets in France | 148 | ||
| 6.5 The development of the Italian financial system | 150 | ||
| 6.6 The current position of the Italian financial system | 152 | ||
| 6.7 Summary | 163 | ||
| Key concepts in this chapter | 164 | ||
| Questions and problems | 164 | ||
| Further reading | 164 | ||
| 7 Financial systems in Northern Europe | 166 | ||
| 7.1 Introduction | 167 | ||
| 7.2 Banking systems in the Nordic countries | 168 | ||
| 7.3 Other financial intermediaries in the Nordic countries | 171 | ||
| 7.4 The evolution and integration of financial systems in Scandinavia | 174 | ||
| 7.5 Monetary policy strategies in the Nordic countries | 177 | ||
| 7.6 Summary | 180 | ||
| Key concepts in this chapter | 180 | ||
| Questions and problems | 181 | ||
| Further reading | 181 | ||
| Part 3 Theory | 183 | ||
| 8 Portfolio theory | 185 | ||
| 8.1 Introduction | 186 | ||
| 8.2 Risk and return | 186 | ||
| 8.3 Diversification | 187 | ||
| 8.4 ‘Market’ and ‘specific’ risk | 191 | ||
| 8.5 The capital asset pricing model | 192 | ||
| 8.6 Summary | 194 | ||
| Key concepts in this chapter | 195 | ||
| Questions and problems | 195 | ||
| Further reading | 195 | ||
| 9 The determination of short-term interest rates | 196 | ||
| 9.1 Introduction | 197 | ||
| 9.2 Interest rates defined and classified | 197 | ||
| 9.3 ‘Market’ theories of interest rate determination | 198 | ||
| 9.4 The role of central banks – ‘administered’ interest rates | 206 | ||
| 9.5 A synthesis | 210 | ||
| 9.6 Summary | 211 | ||
| Key concepts in this chapter | 211 | ||
| Questions and problems | 212 | ||
| Further reading | 212 | ||
| 10 The structure of interest rates | 213 | ||
| 10.1 Introduction | 214 | ||
| 10.2 The effect of term | 214 | ||
| 10.3 The effect of risk | 217 | ||
| 10.4 Expectations and government borrowing | 218 | ||
| 10.5 Summary | 222 | ||
| Key concepts in this chapter | 223 | ||
| Questions and problems | 223 | ||
| Further reading | 223 | ||
| 11 The valuation of assets | 224 | ||
| 11.1 Introduction | 225 | ||
| 11.2 Supply and demand in asset markets | 225 | ||
| 11.3 Asset valuation | 227 | ||
| 11.4 The ‘fundamentals’ of asset valuation | 232 | ||
| 11.5 An alternative interpretation | 233 | ||
| 11.6 Summary | 235 | ||
| Key concepts in this chapter | 236 | ||
| Questions and problems | 236 | ||
| Further reading | 237 | ||
| Appendix to Chapter 11 | 237 | ||
| Part 4 Money and Banking | 239 | ||
| 12 Banks and the supply of money | 241 | ||
| 12.1 Introduction | 242 | ||
| 12.2 The definition of money | 242 | ||
| 12.3 Banks’ balance sheets | 249 | ||
| 12.4 Models of money supply determination | 255 | ||
| 12.5 Controlling the money supply | 259 | ||
| 12.6 Summary | 263 | ||
| Key concepts in this chapter | 263 | ||
| Questions and problems | 264 | ||
| Further reading | 264 | ||
| 13 The demand for money | 265 | ||
| 13.1 Introduction | 266 | ||
| 13.2 The standard approach to the transmission mechanism | 266 | ||
| 13.3 Testing the demand for money – the outcome | 270 | ||
| 13.4 A more realistic approach to the transmission mechanism of monetary policy | 272 | ||
| 13.5 Summary | 277 | ||
| Key concepts in this chapter | 277 | ||
| Questions and problems | 278 | ||
| Further reading | 278 | ||
| 14 Monetary policy | 279 | ||
| 14.1 Introduction | 280 | ||
| 14.2 The simple Phillips curve | 281 | ||
| 14.3 The ‘expectations-augmented’ Phillips curve | 283 | ||
| 14.4 The policy irrelevance theorem | 285 | ||
| 14.5 The Phillips curve and monetary policy today | 287 | ||
| 14.6 Rules and discretion in monetary policy | 290 | ||
| 14.7 Governments, inflationary incentives and independent central banks | 293 | ||
| 14.8 Summary | 297 | ||
| Key concepts in this chapter | 298 | ||
| Questions and problems | 298 | ||
| Further reading | 299 | ||
| Part 5 Markets | 301 | ||
| 15 Money markets | 303 | ||
| 15.1 Introduction | 304 | ||
| 15.2 Money market instruments: characteristics and yields | 305 | ||
| 15.3 Characteristics and use of the money markets | 310 | ||
| 15.4 Official intervention in the money markets | 311 | ||
| 15.5 The Eurocurrency markets | 317 | ||
| 15.6 Summary | 319 | ||
| Key concepts in this chapter | 319 | ||
| Questions and problems | 320 | ||
| Further reading | 320 | ||
| 16 Bond markets | 321 | ||
| 16.1 Introduction | 322 | ||
| 16.2 Bonds: types and characteristics | 322 | ||
| 16.3 Bond prices and yields | 324 | ||
| 16.4 Risk and fixed interest bonds | 332 | ||
| 16.5 The term structure of interest rates | 336 | ||
| 16.6 Characteristics of the bond markets | 344 | ||
| 16.7 International bonds | 348 | ||
| 16.8 Summary | 352 | ||
| Key concepts in this chapter | 352 | ||
| Questions and problems | 353 | ||
| Further reading | 354 | ||
| 17 Equity markets | 355 | ||
| 17.1 Introduction | 356 | ||
| 17.2 Company shares: types, characteristics and returns | 357 | ||
| 17.3 Equity pricing | 358 | ||
| 17.4 Share price movements | 368 | ||
| 17.5 Equity market characteristics | 371 | ||
| 17.6 Summary | 377 | ||
| Key concepts in this chapter | 377 | ||
| Questions and problems | 378 | ||
| Further reading | 378 | ||
| 18 Foreign exchange markets | 380 | ||
| 18.1 Introduction | 381 | ||
| 18.2 Foreign exchange rates in the Financial Times | 384 | ||
| 18.3 Interest rate parity | 396 | ||
| 18.4 Exchange rate arbitrage | 398 | ||
| 18.5 Foreign exchange risk and speculation | 399 | ||
| 18.6 Reasons for exchange rate changes – theory and practice | 401 | ||
| 18.7 Summary | 408 | ||
| Key concepts in this chapter | 408 | ||
| Questions and problems | 409 | ||
| Further reading | 410 | ||
| 19 Derivatives – the financial futures markets | 411 | ||
| 19.1 Introduction | 412 | ||
| 19.2 The nature of financial futures | 413 | ||
| 19.3 Reading the Financial Times | 416 | ||
| 19.4 The pricing of futures | 420 | ||
| 19.5 Summary | 429 | ||
| Key concepts in this chapter | 429 | ||
| Questions and problems | 429 | ||
| Further reading | 430 | ||
| 20 Options, swaps and other derivatives | 432 | ||
| 20.1 Introduction | 433 | ||
| 20.2 Options | 433 | ||
| 20.3 Principal types of options on financial assets | 436 | ||
| 20.4 The pricing of options | 441 | ||
| 20.5 Exotic options | 446 | ||
| 20.6 Swaps | 449 | ||
| 20.7 Other investment products and derivative contracts | 451 | ||
| 20.8 Comparing different types of derivatives | 452 | ||
| 20.9 The use and abuse of derivatives | 453 | ||
| 20.10 Summary | 458 | ||
| Key concepts in this chapter | 458 | ||
| Questions and problems | 459 | ||
| Further reading | 460 | ||
| Part 6 Current Issues | 461 | ||
| 21 The internal European market | 463 | ||
| 21.1 Introduction | 464 | ||
| 21.2 The objectives and achievements of the Single European Act | 464 | ||
| 21.3 The single financial market (European Financial Common Market – the EFCM) | 467 | ||
| 21.4 Progress towards the EFCM | 472 | ||
| 21.5 The Financial Services Action Plan | 478 | ||
| 21.6 Enlargement to 27 | 480 | ||
| 21.7 Summary | 483 | ||
| Key concepts in this chapter | 484 | ||
| Questions and problems | 484 | ||
| Further reading | 484 | ||
| 22 The European Monetary System and monetary union | 485 | ||
| 22.1 Introduction | 486 | ||
| 22.2 The Treaty on European Union and the plans for monetary union | 488 | ||
| 22.3 The problems of the 1990s | 489 | ||
| 22.4 The movement to monetary union | 491 | ||
| 22.5 Monetary union developments | 492 | ||
| 22.6 The euro area – future membership prospects | 496 | ||
| 22.7 Summary | 504 | ||
| Key concepts in this chapter | 505 | ||
| Questions and problems | 505 | ||
| Further reading | 505 | ||
| 23 The European Central Bank and euro area monetary policy | 506 | ||
| 23.1 Introduction | 507 | ||
| 23.2 Inflation, exchange rate and default risk in monetary union | 509 | ||
| 23.3 Monetary institutions and policy in the single currency area | 510 | ||
| 23.4 The form of monetary policy in the euro area | 514 | ||
| 23.5 ECB monetary policy and the euro | 518 | ||
| 23.6 Possible reforms at the ECB | 524 | ||
| 23.7 Summary | 525 | ||
| Key concepts in this chapter | 526 | ||
| Questions and problems | 526 | ||
| Further reading | 526 | ||
| 24 Financial innovation | 527 | ||
| 24.1 Introduction | 528 | ||
| 24.2 Theories of innovation | 528 | ||
| 24.3 Three case studies | 532 | ||
| 24.4 The demand for money and monetary policy | 539 | ||
| 24.5 Summary | 544 | ||
| Key concepts in this chapter | 544 | ||
| Questions and problems | 545 | ||
| Further reading | 545 | ||
| 25 The regulation of financial markets | 547 | ||
| 25.1 Introduction | 548 | ||
| 25.2 The difficulties of regulation | 550 | ||
| 25.3 The Financial Services Authority (FSA) | 554 | ||
| 25.4 Banking regulation | 560 | ||
| 25.5 The impact of globalization and financial innovation – the Basel Committee | 562 | ||
| 25.6 The regulation of universal banking in the EU | 568 | ||
| 25.7 Summary | 569 | ||
| Key concepts in this chapter | 569 | ||
| Questions and problems | 570 | ||
| Further reading | 570 | ||
| 26 Financial market efficiency | 571 | ||
| 26.1 Introduction | 572 | ||
| 26.2 The efficient market hypothesis | 573 | ||
| 26.3 Implications of the EMH | 575 | ||
| 26.4 Testing the EMH | 579 | ||
| 26.5 Market rationality | 582 | ||
| 26.6 Behavioural finance | 585 | ||
| 26.7 Summary | 587 | ||
| Key concepts in this chapter | 588 | ||
| Questions and problems | 588 | ||
| Further reading | 588 | ||
| Case studies | 590 | ||
| Case study 1 The structure of banking and conflicts of interest | 590 | ||
| Case study 2 The dotcom phenomenon | 593 | ||
| Case study 3 Efficient markets: contrasting evidence | 598 | ||
| Case study 4 The Northern Rock affair | 603 | ||
| Case study 5 Exchange rate explanations – interpreting the news | 606 | ||
| Case study 6 Judging the regulator – the FSA, praise and blame | 608 | ||
| Case study 7 The ‘who’ and ‘why’ of financial exclusion | 612 | ||
| Case study 8 Financial scandals and the impact on markets: Parmalat | 613 | ||
| Glossary of terms | 617 | ||
| A | 617 | ||
| B | 617 | ||
| C | 617 | ||
| D | 618 | ||
| E | 618 | ||
| F | 619 | ||
| H | 619 | ||
| I | 619 | ||
| L | 620 | ||
| M | 620 | ||
| N | 621 | ||
| O | 621 | ||
| P | 621 | ||
| R | 621 | ||
| S | 622 | ||
| T | 622 | ||
| V | 622 | ||
| Answers to exercises | 623 | ||
| Index | 627 | ||
| A | 627 | ||
| B | 627 | ||
| C | 628 | ||
| D | 628 | ||
| E | 629 | ||
| F | 629 | ||
| G | 630 | ||
| H | 630 | ||
| I | 630 | ||
| J | 631 | ||
| K | 631 | ||
| L | 631 | ||
| M | 631 | ||
| N | 632 | ||
| O | 632 | ||
| P | 632 | ||
| R | 633 | ||
| S | 633 | ||
| T | 634 | ||
| U | 634 | ||
| V | 634 | ||
| W | 634 | ||
| Y | 634 | ||
| Z | 634 |