Financial Markets Institutions ECO 473 Money Banking Dr
Financial Markets & Institutions ECO 473 – Money & Banking – Dr. D. Foster
Economic Functions of Financial Markets Match savers and investors Don’t savers and investors have different goals? Explain why the answer is “No. ” Spread/share risk. Successful strategy - diversification Diversification seems like the opposite of our concept of specialization (of labor). If it is true that we maximize our standard of living by specializing, why isn’t that true for saving/investing?
Financial Markets - Why & Who n n ◦ ◦ ◦ Why - Intermediation Who. . . banks credit unions S&Ls thrifts savings banks n n n pension funds Insurance companies mutual funds mortgage brokers investment bankers finance companies Government Players
Financial Markets - New & Used New - Primary Markets Used - Secondary Markets Suppose that secondary markets were prohibited (maybe they are too speculative). What would happen to primary markets? Financial Markets - Short & Long Short - Money Markets Long - Capital Markets
Financial Institutions Mutual Funds Hedge Funds Brokers and Dealers Investment Banks
The End of Investment Banks? 1930 s regulations 2008 - collapse of the MBS market. Bear Stearns - couldn’t roll over debt. Lehman Brothers - $639 bill. in assets. Merrill Lynch - sold to Bo. A Goldman Sachs & Morgan Stanleyconverted to commercial banks.
Financial Markets & Institutions ECO 473 – Money & Banking – Dr. D. Foster
- Slides: 7