货币银行学Money and Banking课件讲义

MoneyandBankingChapter1

WhyStudyMoney,Banking,andFinancialMarkets?

WhystudyfinancialmarketsFinancialmarketsincludethebondmarket,thestockmarket,andtheforeignexchangemarketFinancialmarketsareplaceswherefundsaretransferredfrompeoplewhohaveanexcessofavailablefundstopeoplewhohaveashortage.

Financialmarketsarechannelingfundsfrompeoplewhodonothaveaproductiveuseforthemtothosewhodo,aprocessthatresultsingreatereconomicefficiency.Activitiesinfinancialmarketshavedirecteffectsonpersonalwealth,thebehaviorofbusinessesandconsumers,andtheoverallperformanceoftheeconomy.

Thebondmarketandinterestrates

(1)Asecurity(financialinstrument)isaclaimontheissuer’sfutureincomeorassets.(2)Abondisadebtsecuritythatpromisestomakepaymentsperiodicallyforaspecifiedperiodoftime.(3)Thebondmarketallowscorporationsandgovernmentstoborrowtofinancetheiractivitiesanditiswhereinterestratesaredetermined.InterestratesAninterestrateisthecostofborrowingorthepricepaidfortherentaloffunds.Interestratesaffectconsumers’willingnesstospendorsaveandbusinesses’investmentdecisions.Itisimportanttounderstandhowandwhyinterestratesfluctuate.

Thestockmarket

(1)Astockrepresentsashareofownershipinacorporation.(2)Astockisasecuritythatisaclaimontheearningsandassetsofacorporation.(3)Astockmarketisaplacewherecorporationscanraisefundsforinvestment.(4)Thepriceofsharesaffectstheamountoffundsthatcanberaisedbysellingnewlyissuedstocktofinanceinvestmentspending.Theforeignexchangemarket

(1)Theforeignexchangemarketiswheretheconversionofcurrencytakesplaceinordertotransferfundsfromonecountrytoanothercountry.(2)Theforeignexchangerateisthepriceofonecountry’scurrencyintermsofanother’s,whichisdeterminedintheforeignexchangemarket.(3)Achangeintheexchangeratehasadirectimpactonconsumersbecauseitaffectsthecostofforeigngoods.Whystudybankingandfinancialinstitutions?Structureofthefinancialsystem

(1)Thefinancialsystemcomprisesmanydifferenttypesoffinancialinstitutions,includingbanks,insurancecompanies,mutualfunds,financecompanies,andinvestmentbanks.(2)Financialintermediariesareinstitutionsthatborrowfundsfrompeoplewhohavesavedandinturnmakeloanstoothers.BanksandotherfinancialinstitutionsBanksarefinancialintermediariesorinstitutionsthatacceptdepositsandmakeloans.Banksarethefinancialinstitutionsthattheaveragepersoninteractswithmostfrequently.Financialinnovation(1)Financialinnovationisdevelopedbyfinancialinstitutionstogeneratehigherprofits.(2)Byseeinghowandwhyfinancialinstitutionshavebeencreativeinthepast,weobtainabettergraspofhowtheymaybecreativeinthefuture.Whystudymoneyandmonetarypolicy?

Money,referredtoasthemoneysupply,isdefinedasanythingthatisgenerallyacceptedinpaymentforgoodsorservicesorintherepaymentofdebts.Moneyislinkedtochangesineconomicvariablesthataffectallofusandareimportanttothehealthoftheeconomy.

Moneyandbusinesscycles

(1)Moneyplaysanimportantroleingeneratingbusinesscycles.(2)Itisobservedthattherateofmoneygrowthhasdeclinedbeforeeveryrecession.However,noteverydeclineintherateofmoneygrowthisfollowedbyarecession.(3)Westudymonetarytheory,thetheorythatrelateschangesinthequantityofmoneytochangesinaggregateeconomicactivityandthepricelevel.Moneyandinflation

Whatexplainsinflation?(1)Weobservethatthemoneysupplyandthepricelevelgenerallymovecloselytogether.(2)Acontinuingincreaseinthemoneysupplymightbeanimportantfactorincausingthecontinuingincreaseinthepricelevel.(3)MiltonFriedman:Inflationisalwaysandeverywhereamonetaryphenomenon.(4)Welookatmoney’sroleincreatinginflation.Moneyandinterestrates

(1)Moneyplaysanimportantroleininterestratefluctuations.(2)Howevertherelationshipbetweenmoneygrowthandinterestrateshasbeenlessclear-cutinthe1980sand1990s.Conductofmonetarypolicy

(1)Becausemoneycanaffectmanyeconomicvariablesthatareimportant,policymakerscareabouttheconductofmonetarypolicy,themanagementofmoneyandinterestrates.(2)Theorganizationresponsiblefortheconductofanation’smonetarypolicyisthecentralbank.Budgetdeficitsandmonetarypolicy

(1)Thegovernmentmustfinanceanybudgetdeficitsbyborrowing.(2)Weexaminewhybudgetdeficitsmightleadtoahigherrateofmoneygrowth,ahigherrateofinflation,andhigherinterestrates.Howwewillstudymoney,banking,andfinancialmarkets?

Westresstheeconomicwayofthinkingbydevelopingaunifyingframeworktostudymoney,banking,andfinancialmarkets.Theframeworkencompassesthefollowingbasicconcepts:1.

Asimplifiedapproachtothedemandforassets.