bank

(noun)

An institution where one can place and borrow money and take care of financial affairs.

Related Terms

Examples of bank in the following topics:

  • A Bank Failure

    • A bank failure is a bank develops financial problems and fails.
    • Moreover, the bank could sell loans to other banks.
    • Bank borrows the funds from the central bank or from another commercial bank.
    • How does a bank prevent a bank failure?
    • Your bank could ask other banks for a loan, but other banks may decline if they believe your bank will fail.

  • The Glass Steagall Banking Act

    • This law divided the functions of investment banking and commercial banking.
    • First, the FDIC closes the bank and seizes the bank's assets.
    • Next, the FDIC keeps the bank open and searches for another bank that will buy the failed bank.
    • The FDIC also allows a bank to cross a state line to buy a failed bank.
    • Contagion is a bank run on one bank leads to bank runs on other banks.

  • Becoming an International Bank

    • Banks in the United States use four methods to become an international bank, which are:
    • Method 1: The U.S. bank opens a bank branch in a foreign country.
    • Bank branches help the bank transfer money across nations' borders.
    • The U.S. bank buys and becomes a majority shareholder of a foreign bank.
    • Method 4: The U.S. bank creates an international banking facility (IBF).

  • The United States Banking System

    • As of 2010, the United States had roughly 1,500 national banks and 50 foreign national banks.
    • Moreover, the Fed regulates banks.
    • The United States had 14,217 banks in 1986, which fell to 9,459 banks by 2010.
    • Unit banking restricts a bank to a single geographical location, such as in one city, and the bank cannot branch to other cities.
    • Furthermore, branch banking allows a bank to have two or more banking offices owned by a single banking corporation within a geographical area.

  • Answers to Chapter 2 Questions

    • Bank deposits are liquid.
    • The FDIC liquidates a bank's assets and refunds the deposits to the depositors, or the FDIC finds another bank to merge with the failed bank.
    • A bank run is depositors show up at their bank at once and demand their deposits back.
    • A contagion is one bank run leads to other bank runs, even for financially healthy banks.
    • First, a bank acquires stock in another bank, allowing it to cross a state line.

  • A Bank's Balance Sheet

    • We study the business of banking by examining a bank's assets, liabilities, and capital.
    • Banks can borrow from the Federal Reserve or from other banks.
    • We show the banks' borrowings in Table 1.U.S. banks borrowed $97.1 billion from U.S. banks and $840.3 billion from others non banks.
    • On the other side of a bank's balance sheet, a bank has assets.
    • A bank has money, so a bank can pay depositors cash when they come to the bank to withdraw funds.

  • Functions of International Banks

    • An international bank operates in two or more countries.
    • After this chapter, students will understand why banks enter the international markets, and the methods a bank uses to enter a foreign market.
    • International banks transcend the functions of a domestic bank because they link savers and borrowers across different countries.
    • HP goes to an international bank, where the bank grants a short-term loan for the memory chip purchase.
    • International banks provide three benefits.

  • Financial Innovation

    • First method to circumvent banking regulations, bank leaders and owners developed bank holding companies.
    • Allowing banks to participate in non-financial activities is called universal banking.
    • For example, a bank holding company controls one bank, and this bank needs funds.
    • Legally, the bank is no longer a bank and becomes exempted from the extensive U.S. bank regulations.
    • First, banks can acquire other banks, reducing the number of banks in the United States.

  • Discount Policy

    • Consequently, the bank sells a $10,000 T-bill to the Fed, and the Fed boosts bank's reserves by $9,000.
    • Then the banks borrow cheaply from the Fed, boosting the reserves in the banking system.
    • Thus, banks have fewer reserves, causing reserves in the banking system to fall.
    • Thus, the Fed grants a long-term loan to this bank, preventing a bank failure.
    • If a bank needs a loan from the Fed, and the bank did not do what the Fed wanted, then the Fed could refuse to loan to the bank.

  • The Check Clearing Proces

    • Subsequently, its bank sends the check to the Fed because the Fed can clear the check between your bank and the computer firm's bank.
    • Consequently, the bank can lend these reserves.
    • Thus, the total reserves of the banking system increase because banks did not lose reserves.
    • That $1,000 check you wrote now exists as a $1,000 in your bank account and the computer firm's bank account.
    • The Fed collects the $1,000 from your bank.