Andoh, S: Essentials of Money, Banking and Financial Institu

The study of money, banking and financial markets is a required or very popular elective in most undergraduate and graduate programs in economics and finance in Africa. However, the textbooks used are those written primarily for the developed world such as the United States or the U.K. The result is that students graduate with excellent theoretical knowledge about the subject matter as it pertains to the developed economies, but lack the ability to apply the same knowledge to less developed economies.Although the subject matter of money and banking can be treated at a theoretical level, it is best done with institutions in mind. As an application oriented course, references and applications should, as much as possible, be to the conditions and institutions present in the environment where the subject is being studied and where the knowledge will be used, rather than to institutions that exist elsewhere in developed economies. The primary purpose of Essentials of Money, Banking and Financial Institutions is to provide a text in money, banking, and financial institutions in the context of the developing economies, especially Africa. Throughout the book, a deliberate effort will be made to focus the students' attention on the need to develop the existing institutions so they can help to accelerate economic development.

Essentials of Money, Banking and Financial Institutions builds on the essential concepts of money and banking and applies them in the context of developing countries. Frequent comparisons between developed and developing countries are made to enable students to make proper inferences about the efficacy of certain concepts.

Table of ContentsINTRODUCTIONChapter 1Money, Banking and Financial MarketsThe Financial System: Markets & InstitutionsThe Scope of BookFinancial System: MarketsThe Importance of Financial Markets to Economic DevelopmentFinancial IntermediariesSome Facts about the Financial System across the WorldThe Special Role of Money in Financial MarketsChapter SummaryKey ConceptsProblems and ApplicationsMONEYChapter 2The Concept of MoneyFunctions of MoneyMedium of ExchangeStore of ValueUnit of AccountWhat Constitutes MoneySeparability of the Functions of MoneyMeasuring MoneyDebit and Credit CardsThe Special Role of Money in the EconomyChapter SummaryKey ConceptsProblems and ApplicationsINTEREST RATEChapter 3The Concept of Interest RatesMeasuring Interest Rate: Preliminary IdeasMeasuring the interest rateSimple Interest LoansFixed-Payment LoansCouponsDiscount BondsThe Rate of ReturnChapter SummaryKey ConceptsProblems and ApplicationsChapter 4Determination of Interest RateLoanable Funds Approach/Demand and Supply of BondsDemand for Bonds: FactorsWealthExpected Returns on bonds and other assetsExpected inflationExpected risk-of defaultLiquiditySummarySupply of BondsGovernment Budget Deficit/SurplusBusiness Expected ProfitabilityBusiness Taxation or SubsidiesExpected InflationSummaryLiquidity Preference ApproachDemand for MoneyIncomeWealthThe Price LevelMoney Supply and its effects on Interest RateChapter SummaryKey ConceptsProblems and ApplicationsChapter 5Risk & Term Structures of Interest RatesRisk Structure of Interest RatesDefault RiskLiquidityTax ImplicationsTerm Structure of Interest RatesExplaining the Shape of the Yield CurveExpectations Hypothesis LiquidityPremium HypothesisSegmented markets hypothesisPreferred habitat hypothesisInformation Content of the Yield CurveChapter SummaryKey ConceptsProblems and ApplicationsFINANCIAL INSTITUTIONSChapter 6Financial Markets and InstitutionsFinancial MarketsBroad functions of Financial MarketsTypes of Financial MarketsDebt verses Equity MarketsPhysical verses Financial Asset MarketsMoney verses Capital MarketsPrimary verses Secondary marketsPrivate verses Public MarketsOrganized exchanges verses over-the counter (OTC)Trading in Financial MarketsThe Equity MarketStock ExchangesObjectives of the ExchangeThe bond marketThe Derivative MarketRole of Financial InstitutionsDepository Financial InstitutionsSavings and Loans Associations (S&Ls)Credit UnionsCommercial BanksThe Commercial Banking Sector Non-depository Financial InstitutionsFinance CompaniesInsurance CompaniesTerm Life InsuranceWhole Life InsuranceUniversal Life InsuranceVariable Life InsuranceGroup Life InsuranceNonlife or Property and Casualty insuranceRegulation of Financial Markets and InstitutionsChapter SummaryKey ConceptsProblems and ApplicationsChapter 7Depository Institutions: The Business of BankingThe Business of BankingStructure of the IndustryTypes of BanksFunctions of BanksAccepting DepositsGiving out LoansCollecting and settling payments of behalf of customersProviding safety depositsBuying and selling foreign currencyProviding international trade services: bills of exchangeBanks and the Creation of MoneyFractional Reserve BankingChapter SummaryKey ConceptsProblems and ApplicationsChapter 8Managing Depository InstitutionsThe Balance SheetLiabilities and Net WorthAssetsMaking ProfitsMinimizing the cost of acquiring fundsMaximizing revenueManaging riskLiquidity riskLiability and capital managementCapitalInterest rate risksDurationChapter SummaryKey ConceptsProblems and ApplicationsChapter 9Regulating Depository InstitutionsWhy Regulate BanksBank PanicsFinancial and economic stabilityTo protect depositorsTo prevent fraudulent activitiesTo control macroeconomic activityHow to Regulate BanksDeposit InsuranceScreeningInvestor Protection RegulationCredit Allocation RegulationProhibition of certain types of assetsCapital RequirementsThe Basel AccordsCAMELS RatingsCapitalAsset QualityManagementEarningsLiquiditySensitivity to market risksChapter SummaryKey ConceptsProblems and ApplicationsMONEY CREATION, CONTROL & POLICYChapter 10Currency Boards and Central BanksCurrency BoardsFunctions of Currency BoardsCosts and Benefits of Currency BoardsCentral BanksOwnership and Control of Central BanksFunctions of Central BanksConduct Monetary PolicyRegulate the Financial SystemLender of Last ResortGovernment's BankerManage External ReservesOperate the Clearing MechanismIssue Domestic CurrencyOther FunctionsThe Balance Sheet of Central BanksThe Balance SheetChapter SummaryKey ConceptsProblems and ApplicationsChapter 11The Money Supply ProcessThe Money SupplyThe Depository Institutions/BanksThe Money Supply and the Actors in its CreationCreating MoneyDeriving the Formula for Money SupplyChapter SummaryKey ConceptsProblems and ApplicationsChapter 12Demand for Money