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Banking > Chapter 2 > Flashcards

Chapter 2 Flashcards

1
Q

What does MFI stand for?

A

Monetary financial institution

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2
Q

What is an MFI?

A

Another term for DTI

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3
Q

Why are DTIs subjected to stricter regulation than NDTIs?

A

Monetary function of deposits - affects money supply

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4
Q

Are deposits discretionary or contractual?

A

Discretionary

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5
Q

Are pension & insurance payments discretionary or contractual?

A

Contractual

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6
Q

What is a universal bank?

A

Combines commercial activities with activities of investment bank, securities house & insurance firm

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7
Q

What activities might a universal bank do?

A
  • Portfolio management
  • Brokerage of securities
  • Underwriting
  • Mergers & acquisitions
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8
Q

What are drawbacks of universal banking?

A
  • Mis-selling investment products to get commission fees e.g. PPI
  • Risky proprietary trading & market-making
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9
Q

What are benefits of universal banking?

A
  • Economies of scale & scope
  • Smoothed performance is good for financial stability
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10
Q

What are a bank’s core actitvities?

A
  • Payment services
  • Deposits & loans
  • Trade finance / cross-border services
  • Other financial services
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11
Q

What is a payment system?

A

Any organised arrangement for transferring value between participants

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12
Q

What are types of payments?

A
  • Cheques
  • Bank transfers
  • Card payments
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13
Q

What are the advantages of cashless payments for customers?

A
  • Cheaper, faster, more secure
  • Easier to track payments
  • Easier to build credit history
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14
Q

What are the disadvantages of cashless payments for customers?

A
  • Bad spending habits
  • Privacy issues
  • Fraud risk
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15
Q

What are the advantages of cashless payments for society?

A
  • Environmentally friendly
  • Reduction in crime & tax avoidance
  • Supports economic activity
  • Increases financial inclusion for some
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16
Q

What are the disadvantages of cashless payments for society?

A
  • IT risks & cyber-attacks
  • Harms communities / high streets
  • Lack of coordination -> inefficiencies
  • Reduces financial inclusion for some
17
Q

What are the main types of deposit & lending services?

A
  • Current accounts
  • Time / savings deposits
  • Consumer loans & mortgages
18
Q

What is fintech?

A

Any innovative use of technology in financial services

19
Q

What are the three levels of fintech?

A
  • Fintech activities e.g. asset management
  • Enabling technologies e.g. cloud computing
  • Policy enablers e.g. data protection

Banking (10 decks)

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