What are the basic arguments for increasing capital requirements at large commercial banks? In what ways will depositors, stockholders, and society in general benefit? How might each group be disadvantaged? As commercial banks enter new lines of business such as brokerage, how much additional capital should be required? Should these new lines of business be insured by the FDIC? Why or why not? Give examples from today’s financial marketplace.

Q: Minimum capital requirement is a popular tool for bank regulation around the world. Some commented…

A: The main disagreement is that the risk is fewer when the bank upsurges its capital. In other sense,…

Q: During the wake of the financial crisis, Ben Bernanke, chairman of the Federal Reserve, said that…

A: Question is based on the concept of Financial ratios

Q: Which of the following statements is NOT true? OSmall banks typically focus on the retail side O…

A: There are various types of banks in any economy, the broad classification can be specified as :…

Q: Banks are important to the study of money and the economy because they     provide a channel for…

A: Banks and economy: Banks are an important branch of the economy in modern world. Banks perform…

Q: Bank-based systems of financing non-financial companies are more effective than capital market-based…

A: Financial systems can help to keep domestic savings at home if they are well-governed. Financial…

Q: Finance professionals make decisions that fall into three distinctive areas: corporate finance,…

A: The classifications of decisions according to the area of finance:

Q: What is your understanding on private equity, is it financial institution? Explain. If you are a…

A: Private equity is a type of alternative investment that involves money that isn't traded on a public…

Q: What are the most important tactics that small companies can use to ensure their long-term financial…

A: Financial security is very important for small companies to sustain over the long period of time.

Q: The managers of a firm wish to expand the firm's operations and are trying to determine the amount…

A: The method of supplying funding for commercial activities, acquisitions, or investments is known as…

Q: Which of the following statements is NOT true? O Small banks typically focus on the retail side  O…

A: Banking- A bank is a type of financial institution that lends money to customers and collects demand…

Q: Which of the following is not a financing decision?   A   Should the firm borrow money from a…

A: Financing decisions- It is concerned with the quantum of funds to be raised from the various…

Q: Examine the processes for the acquisition of licence by Banks and other financial institutions in…

A: Answer: The legislation which regulated the acquisition process of license by a bank is Banking Act,…

Q: Which one of the following statements is wrong about finance? Select one: O a. The financial…

A: The financial market and finance industry are set in place to help facilitation between the holders…

Q: he Jones Bank Ltd has two departments.  a) a pension fund department, which invests money on behalf…

A: The question is based on the concept of response from the bank for economic recession under the…

Q: a. “A robust financial market is one of the pillars of stable economic growth and secured financial…

A: Financial market is a place that helps in transferring the money from those who have surplus funds…

Q: do you think that the collaboration between Central Banks and Government creates challenges for…

A: If a country's economy were a human body, the central bank would be its heart. And, just as the…

Q: What are the ways in which a bank can increase its capital adequacy ratio?

A: Capital Adequacy Ratio or CAR is referred as the measure through the capital for the bank that are…

Q: Which of the following statements describes the cost of capital?…

A: Cost of Capital refers to that rate of return that a firm expects to earn from its investments for…

Q: Banks still make more money on investments than fees for customer-related non-credit-related fees.…

A: Investment banking:  Investment banks will also help with reorganizations, mergers, and trades for…

Q: What is the important question of corporate finance when a finance manager advises the company’s…

A: Capital Budgeting Techniques helps to decide the investment project that should be selected.

Q: Which one of the following is NOT an implication of market efficiency for corporate finance?

A: Since you have posted multiple independent questions in the same request, we will solve the first…

Q: How can we raise the capital specification for shadow banks and depository institutions and make…

A: Capital specification is the capital or equity requirements that are to be maintained by the banks.…

Q: Suppose the population of Area Y is relatively young, and the population of Area O is relativelyold,…

A: a) Area Y consists of a comparatively young population and will thus save low and have a large…

Q: ROA and ROE are considered as the performance evaluation tools for banks. Do they always move in the…

A: Return on equity (ROE) and return on assets (ROA) are two of the most critical metrics to determine…

Q: What is the important question of corporate finance when a finance manager advises the company’s…

A: Hi, since you have asked two different question. We will answer the first one as per the authoring…

Q: Which of the following makes this a true statement? In this slightly more realistic world with…

A: We derive a firm's value by discounting its future cash flows. We use weighted average cost of…

Q: In recent years, ‘direct lenders’ and ‘shadow banks’ have increasingly provided funding for…

A: The lending agencies are the financial institutions that provide funds to the public, business…

Q: Why are banks currently holding capital well above the minimum regulatory requirement?

A: Capital is the main and important ingredient of banks, without capital , we cannot run a bank,…

Q: With the demise or transformation of the great investment banks of Wall Street, has the need for…

A:

Q: Companies that face large investments they cannot finance internally through the retention of…

A: Floatation costs are the expenses incurred to raise capital such as, brokerage fee, underwriting…

Q: Write methodology of impact of intellectual capital on the performance of SMEs/banks

A: Intellectual capital can be defined as the intangible assets which are very essential for the…

Q: Which of the following would reduce a firm's WACC after tax? a. A firm invests in an average-risk…

A: WACC = (weight age of equity * cost of equity ) + [(weight age of debt * cost of debt)*(1-tax rate)]…

Q: How financial manager considered a risk and return for the firm? • Why the financial manager should…

A: A) Financial managers consider many risk and return factors when making investment and financing…

Q: How is securitization supposed to help banks and S&Ls manage risks andincrease homeowners’…

A: Securitization is a method in which assets are converted in securities by using financial tools.…

Q: a) One of the biggest problems for any economy is to figure out how to get or transfer money from…

A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: What is the important question of corporate finance when a finance manager advises the company’s…

A: Capital Budgeting techniques are used to decide the investment project that should be selected.

Q: Armbrust Corporation is the maker of fine fitness equipment. Armbrust's bank has been pressuring the…

A: Liquidity is firms ability to pay short term liablitity using short term asset i.e using current…

Regulation of Commercial Banks

The main function of any commercial bank is accepting deposits and lending money to borrowers. Apart from these two activities, commercial banks provide a host of other services to their customers, like discounting bills of exchange, acting as a custodian of a customer's will, and so on. In the absence of a proper regulatory framework or proper regulations in place, the commercial banks would have ended up charging exorbitant or varied rates of interest or service charges on the funds loaned by them or the services performed by them.