Role of banks Flashcards
(11 cards)
What is financial intermediation by banks?
Connecting savers with borrowers by taking deposits and issuing loans.
How do banks create credit?
By lending more than they hold in reserves, expanding the money supply.
What does it mean for banks to underwrite securities?
Helping firms raise capital by issuing stocks or bonds, like during IPOs.
What is a market maker in banking?
A bank that quotes continuous buy/sell prices to ensure market liquidity.
What is proprietary trading?
When banks trade financial assets for their own profit.
What is client trading by banks?
Executing trades on behalf of investors or institutions.
What are clearing, settlement, and custody services?
Ensuring secure trade execution, transfer of funds/securities, and safe storage.
How do banks facilitate foreign exchange?
By converting currencies and handling international payments for clients.
What role do banks play in risk management?
They use derivatives like swaps and options to hedge against various risks.
What advisory services do banks provide?
Strategic advice on mergers, acquisitions, and capital planning.
How do banks support compliance?
Helping clients meet legal and regulatory standards
