Financial Economics

objectives of central banks
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Objectives of Central Banks

entral banks oversee the banking system in their country. They play an important role in managing a state’s currency, money supply, and interest rates. There are five major objectives of central banks that is widely seen around the world. Objectives of Central Banks Inflation A central bank pursues a low and stable rate of inflation. Employment It aims for…

banking regulations in the united states
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Banking Regulation in the United States

he United States has imposed has created banking regulation to prevent unnecessary damage to confidence and liquidity in the financial system. The regulations are meant to prevent the following. Reasons for Banking Regulation in the U.S. Bank Runs Bank runs occur due to fears of insolvency. For this reason, the  Federal Deposit Insurance Commission (FDIC) guarantees all bank…

Non Bank Financial Institutions
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Non Bank Financial Institutions

ome examples of non bank financial institutions (NBFI) include those financial institutions that do not have a full banking license or are not supervised by a national or international banking regulatory agency. Non Bank Financial Institutions also add competition in the provision of financial services. While banks may offer a set of financial services as a packaged deal, Non…

Provisions in the Glass-Steagall Act
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The Glass-Steagall Act

he Glass-Steagall Act (1933) separated depository institutions from investment banks and limited securities, activities, and affiliations within commercial banks and securities firms. In 1933, in the wake of the 1929 stock market crash and during a nationwide commercial bank failure and the Great Depression, two members of Congress put their names on what is known today as the…

implications of the mcfadden act
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Implications of the McFadden Act

he McFadden Act (1927 – 1994) was appealed by the Riegle-Neal Interstate Banking and Branching Efficiency Act. The Act made national banks competitive against state-chartered banks by letting national banks add more branches to the extent permitted by state law. The McFadden Act specifically prohibited interstate branching by allowing each national bank to branch only within the state…

direct finance
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Direct Finance

hen borrowers borrow funds directly from the financial market without using a third party service, such as a financial intermediary, it is called direct finance. Brokers, dealers and investment bankers play important roles in direct financing. This method is different from indirect financing, where a financial intermediary takes the money from the lender against a…

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